In conversation with Mr. Ahmed Samir Hemeda, Regional Facility Manager at Hill International, Penang, we tried to understand the Facility Management Market in Saudi Arabia.
“The Saudi Facility Management Market is in the growth stage and is shaped by the government initiative programmes such as Vision 2030 and growth of Commercial Real estate.”
Q1. How would you like to describe the current phase of the Facility Management industry in Saudi Arabia?
The facility management market in Saudi Arabia is at a growing stage due to various government initiatives to develop the non-oil economy and the real estate industry in Saudi Arabia. Developments by the government such as setting up of “Neom”, “Al Faisaliah City”,”Amaala” would boost the future demand of Saudi Arabia Facility Management Services.
Q2. How big is the Facility Management Market in Saudi Arabia?
According to my knowledge, currently the market size would be around USD 20 Billion and is expected to grow at a CAGR of 8-10%.
Q3. There are two major types of services being offered in Facility Management, i.e., Hard Services (HVAC, machinery, operations and maintenance, Fire safety) and Soft Services (Cleaning, Security, and Landscaping). Can you tell me which type of service dominates the market?
Both types of services are required depending on the types of projects. Some projects require more of soft services such as the hospitality sector while industries and plants are more dependent on hard services.
In the past 5 years, the demand for soft services has increased more than hard services in terms of contract values. So around, 60-70% of the market revenue is so contributed by soft services while around 30-40% are contributed by hard services. With technological advancement, hard services would play a very important role in future.
Q4. Considering further split of Soft Services, which sub-services are most demanded by the end users/clients?
All types of Soft Services are required depending on the types of buildings. However, cleaning and security services are usually demanded by majority of the end users in the soft services facility management market in KSA.
Q5. What is the client preference for Single, Bundled and Integrated Services?
In the current scenario, clients prefer to give separate contracts of hard and soft services to different entities. So that problems with one entity won’t affect other entities. But in future, the demand preference would shift to integrated services as they are cost-effective, hassle-free, and have one point of contact.
Q6. Out of different types of End-Users (Commercial, Residential, and Industrial), which sector contributes to the majority of the revenue in KSA Facility Management Services?
Commercial Buildings including offices, retail and hotels contributes to the majority of the revenue in the market. Since Commercial and Residential sector are expected to grow in the future with development of new cities and increased focus in tourism, these sectors are likely to contribute to the majority of the revenue share in the next 5 years.
Q7. What are the top 5 Facility Management Companies operating in Saudi Arabia Market?
The facility management market is one of the biggest industries in Saudi Arabia contributing majority of the revenue in the MENA region. The top 5 players operating in Facility Management Market are Initial Saudi, Safari group, El Seif, EFS, Cushman Wakefield and Enova by Veolia.
Q8. What are the major criteria being considered in awarding the Facility Management Contracts for the project?
Saudi Facility Management Market is a very price-sensitive market. In selecting a vendor, the client provides around 60-70% weightage to the monetary value of the contract and 30-40% weightage to the technical specifications of the contract.
Hence, price of services offered is an important factor apart from other factors like good quality services, technology used, experience of the employees and free value-added services offered by companies.
Q9. What is the average duration of contracts generally awarded to companies?
Generally, most of the contracts are awarded for 1-3 years but in the case of government contracts, long-term contracts of 5 years are also finalised.
Q10. What are the challenges being faced in the growth of the Facility Management Industry?
Some of the industry challenges include government regulation regarding the minimum employment of Saudi Citizens in the total workforce employed, unavailability of skilled technicians and labours and expenditure on employee training for more value addition and quality service delivery.
In Facility Management Market, 20% of the workforce employed should be Saudi nationals and this percentage is gradually increasing. Currently, the industry is facing a challenge in terms of hiring Saudi citizens since there are few skilled people in the industry with higher salary expectations compared to Non Saudi’s.
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