Saudi Arabia Facility Management Market Size, Share & COVID-19 Impact Analysis, By Service Type (Hard Services, Soft Services, and Other Services), By Industry Vertical (Healthcare, Government, Education, Military & Defense, Real Estate, and Others), and Country Forecast, 2023-2030

The Saudi Arabia facility management market size was valued at USD 23.54 billion in 2022. The market is projected to grow from USD 24.48 billion in 2023 to USD 43.48 billion by 2030, exhibiting a CAGR of 8.6% during the forecast period.

Rising governmental push for industry localization has become an important effort to transform the economic situation of GCC countries while reducing the region’s reliance on oil revenues. The GCC region has been facing economic disruptions since late 1990’s with rapid depletion and technical obsolescence of hydrocarbon reserves, along with oil price fluctuations. GCC countries have initiated several plans to spur the economies for developing private sectors that will generate job opportunities for the Saudi Arabia facility management labor force, thus creating industry localization and generating economic growth.

In the current market scenario, the Saudi 2030 Vision is playing a major role in surging economic development in the GCC region. This is expected to create ample market opportunities for the building & construction, automotive, and heavy engineering sectors, which is projected to surge the demand for these services across these sectors while gaining advantages from the socio-economic factors in the coming years.

COVID-19 IMPACT

Supply Chain Disruption Hindered the Market Growth During Pandemic

The COVID-19 outbreak had an adverse impact on the value chain and supply chain operations in this industry. The disturbance in the value and supply chain with volatile demand and supply of facility services along with strict government restrictions have curbed the logistics operations in the market.

As of November 2020, the number of COVID-19 active cases in the GCC region reduced by 50%, with mortality rates falling below the average rate. With the government’s focus over prioritizing health and economic need, fiscal and monetary policies were kept accommodative until the GCC region’s recovery is well established. Several manufacturers are currently working to install and initiate operations using robots to establish a sustainable, cost effective, and highly productive facility management department. These manufacturers are investing heavily in the development of robots and creation of collaborative robot infrastructure to automate the services and reduce the expenditure on labor cost. For 2020-2021, the Saudi Arabia’s market was estimated to exhibit a stable growth rate, owing to halted building and construction activities across the country, resulting in reduced demand for facility services from the end-user. The future years are expected to provide a steady recovery to the market owing to the reopening of manufacturing facilities and government initiatives that are trying to reshape the economic downfall since the emergence of the pandemic.

LATEST TREND

Increasing Public-Private-Partnerships (PPP) and Energy Management to Boost Market Growth

Vision 2030 program will play a vital role in boosting the country’s economy and in building the non-oil economy. Under the program, the government of Saudi Arabia has announced to deploy Public-Private-Partnerships (PPP) to glorify its transportation, education, and healthcare infrastructures and increasing energy management requirements. Furthermore, the government has planned to deploy PPP projects in the country to improve its services for beneficiaries by increasing accessibilities for the industry.

Moreover, privatization will lead to huge investments that will ultimately strengthen the infrastructural growth of the country. Therefore, the facility management market share is expected to increase over the forecast period. Additionally, facility management service providers are working continuously on adding energy management services in their portfolios. On the other hand, consumers are adopting such types of facility services, owing to rising energy costs and building’s energy consumption.

DRIVING FACTOR

Government Initiatives of Investing in Tourism and Construction Industries to Bolster Market Growth

Currently, the government of Saudi Arabia is continuously working on its economic diversification by investing in its tourism industry. In recent years, the government has invested heavily in diversifying its non-oil economy. Moreover, under the program named Vision 2030, the government has initiated to unlock its tourism sector by executing numerous substantial changes. In 2019, the government started issuing tourist visas for the first time, which is among the most significant changes recently. The government is promoting the relaxation of immigration rules and the tourism infrastructure development. Over the next 10 years, with the investment for tourism of more than USD 54 billion (SAR 200 billion), the Saudi Arabian government is promoting private sector companies to invest in the kingdom.

Moreover, in April 2021, the Council of Economic and Development Affairs announced that it is taking several recommendations on its 5th anniversary that are necessary to process the next phase of Saudi Vision 2030 to continue the development of construction and other new sectors. This process is expected to include development updates on Vision 2030 programs to ensure an increase in the efficiency of spending, consistency with the targets, and response to economic development.

RESTRAINING FACTOR

Reduced Number of Trained Facility Service Providers to Hinder Market Growth

Reducing number of trained facility service for Saudi Arabia facility management providers and professionals is resulting in limiting contracts and operations while adversely affecting the training and development in the facility industry. Lower daily wages and inconsistent compensations discourage the development of skilled welders across Saudi Arabia and other GCC economies. With the sudden outbreak of the pandemic in March 2020, the Kingdom of Saudi Arabia faced two major issues of COVID-19 pandemic, and historic drop in oil prices and revenue simultaneously in several decades. The sudden halt in several sectors led to slow pace in the Vision 2030 program with declining foreign direct investments.

SEGMENTATION

By Service Type Analysis

Hard Services Segment to Dominate due to Significant Investment in Infrastructure Development

By service type, the market is divided into hard services, soft services, and other services.

The hard services segment holds the lion’s share in the market, including various types of services, such as cleaning, plumbing & drainage, and building fabric maintenance. Saudi Arabia has been investing significantly in infrastructure development, including construction of buildings, roads, airports, and other facilities. The demand for hard services, such as building maintenance, HVAC, electrical systems, and plumbing, is likely to increase as these infrastructures require regular maintenance and upkeep.

The soft services segment is expected to grow significantly at the highest CAGR. This growth is attributed to increasing investments in waste water management, waste management, energy management, and other green energy management sectors. With an expanding commercial sector in Saudi Arabia, including offices, retail spaces, and hospitality establishments, the demand for soft services is likely to increase.

The other services segment is anticipated to depict stable growth that includes services such as catering, environmental management, and utility management. As the country promotes tourism and hosts various events, exhibitions, and conferences, there is an increase in demand for other facility management services.

By Industry Vertical Analysis

Heavy Investment in Healthcare Industry Led to the Healthcare Segment’s Highest CAGR 

Based on industry vertical, the market is split into education, healthcare, government, military & defense, real estate, and others.

The healthcare segment is expected to grow significantly at the highest CAGR during the forecast period, owing to the increase in adoption of healthcare facility management services as a precautionary measure in various countries.

The real estate segment dominated the Saudi Arabia facility management market share in 2020, owing to the government’s focus on investing in its infrastructure sector.

The government segment is likely to witness stable market growth, owing to the government’s focus on investing in its infrastructural sector.

In the educational segment, services, such as space management, integrated services management, and technical maintenance, are among the most important services the institution require that need attention

The military & defense and others segments are anticipated to grow steadily in the near future. As technology evolves in the defense industry, facility management services must adapt to support and maintain advanced defense systems effectively.

COUNTRY INSIGHTS

The Saudi Arabia facility management market growth is expected to rise significantly in the future, owing to continuous urbanization and industrialization. The governments are investing in constructing railways, ports, airports and many other sectors. For this, the governments are contracting with multiple private contractors, including facility service providers to keep the infrastructure clean and green. Wherein, the investment from the private sectors is expected to increase numerously in the future, which will drive the market.

However, the pandemic has restrained the growth of the market in the country in 2020, owing to immediate lockdown announced by the governments to stop the spread of the virus. Moreover, lesser impact of the pandemic has led to modest rise in renewal of the facility service contracts across the Saudi Arabian market.

Moreover, the growth of this market is increasing gradually, owing to huge investments in the infrastructural sectors by public and private companies. Furthermore, Saudi Arabia, which has the fastest growing population, contributes major advancements in the facility industry and is continuously working on investing in healthcare and education sectors as well.

KEY INDUSTRY PLAYERS

Sodexo, CBRE, Majid Al Futtaim – ENOVA, and MEEM FM Hold Considerable Market Share in Terms of Revenue

Major players are acquiring regional players and Small & Medium Enterprises (SMEs) and are partnering with universities across the globe to create lucrative business opportunities in untapped markets. Major global and regional players emphasize remodeling their service activities by partnering with governmental bodies to create profitable, sustainable, and manageable business structures for engineering and infrastructure sectors.

These players emphasize on a well-built culture of excellence in operations, internal control, and business services to sustain in the market. Several companies are remodeling their key account approach (i.e., discontinuing high-end non-key account customer contracts) to establish integrated facility services contracts for their legitimate customers.

LIST OF KEY COMPANIES PROFILED:

• Sodexo (France)


• CBRE Group Inc. (U.S.)


• Compass Group PLC (U.K.)


• Cushman & Wakefield (U.S.)


• Tenon Group (India)


• Dussmann Group (Deutschland)


• Majid Al Futtaim – ENOVA (United Arab Emirates)


• MEEM Facility Management Co. (Saudi Arabia)


• MUHEEL SERVICES (Saudi Arabia)


• TAMAM (Saudi Arabia)

KEY INDUSTRY DEVELOPMENTS:

• January 2022 – ALSAYER Holding Technical Training Center collaborated with ENGIE Solutions, a worldwide leader in sustainable solutions, to conduct a hybrid and electric vehicles training program for the Ministry for Education teachers.


• November 2021 – Zamil Group and international Maritime Industries launched a joint venture for OSV (Offshore Supply Vessel) to meet local market needs and compete in the regional and international arena. The venture aligns with Saudi Arabia’s Vision 2030 and aims to support the development of an advanced and sustainable Saudi maritime industry.


• August 2020 – Saudi Marifiq, which offers soft services, catering, hospitality, and other FM services, entered into a partnership with FS Middle East. Under this strategic collaboration, FSI Middle East will supply a Computer-aided Facilities Management (CAFM) system to Saudi Maraliq, which will be fully integrated into its internal processes.


• June 2020 - Sodexo partnered with Bureau Veritas to introduce hygiene verification labels for Sodexo services that give quality assurance to consumers. This partnership covers on-site facilities management services and catering services. The label was introduced in the U.K., France, the U.S., and Canada and then gradually rolled out in other countries across the globe.


• February 2020 – Enova and Kinan, a leading housing and shopping mall developers in the Kingdom of Saudi Arabia Region signed a 3-year contract to provide facility management services for 10 malls across the Kingdom of Saudi Arabia covering nearly 265 thousand sqm. Enova is expected to introduce its high-quality digital support tools suite to provide the industry-leading facility management services and greater efficiency to the project.

REPORT COVERAGE

The extensively researched report offers an elaborative analysis of numerous factors affecting the market. These include competitive landscape describing the opportunities, growth drivers, threats, key developments, and restraints. In addition, it further helps in analyzing, segmenting, and defining the market based on different segments such as equipment type and applications. The report strategically analyses several strategies such as product innovations, mergers, alliances, joint ventures, and acquisitions adopted by players in the industry along with other market trends.

Report Scope & Segmentation