GCC Facility Management Market - Growth, Trends, COVID-19 Impact, and Forecasts (2023 - 2028)

GCC Facility Management Market - Growth, Trends, COVID-19 Impact, and Forecasts (2023 - 2028)

The GCC Facility Management Market is expected to register a CAGR of 8.6% over the forecast period, owing to the developments in countries such as the United Arab Emirates and Qatar. Factors such as the increasing tourism sector, rising investments in the construction industry, and surging use of advanced technologies, including robotics, artificial intelligence (AI), and infrared/thermal scanning, are expected to drive the growth of the GCC facility management market.

• In the GCC nations, the FM sector is developing. The current oil prices are encouraging capital expenditures, so more new projects will start.The FM sector will therefore keep expanding over time.
• The boom in construction activities, led by the government, and the rising emphasis on green building practices are increasing the demand for facility management in Middle Eastern countries, especially in the UAE and Qatar. The construction sector is projected to record strong growth during the forecast period, with various projects in the tendering or bidding phase.
• According to Qatar's Ministry of Finance, Qatar has a budget of 210.5 billion Qatari riyals (USD 58 billion) to complete the infrastructure projects. The increased awareness among buyers, such as Qatar's residential, commercial, industrial, and public infrastructure sectors, is prompting facility management operators to invest more. In addition to the transportation projects, the government aims to rapidly expand tourism, education, and real estate to maintain its competencies under the Qatar National Vision 2030 (QNV 2030). Further, as the FIFA World Cup deadline approaches this year, the region is witnessing a rise in construction activities and is upgrading its infrastructure. Such developments made Qatar one of the GCC's key investment destinations.
• A big reason for the growth of the GCC facility management market is that there is more focus on outsourcing non-core operations.Large organizations use independent contractors or vendors to outsource their work. Such a shift enhances access to talent and offers cost and time zone advantages. Firms can invest in new technology and training at GCC offshore captive centers to develop internal knowledge and take advantage of outsourcing.
• Currently, there is fierce rivalry on the market, particularly in the UAE. The FM market has recently seen an influx of too many participants, which has pushed down the cost of FM contracts. Due to owner and developer budget constraints, the market has also grown more price-driven.
• Working hours are governed by the labor laws of the country where the firms operate and are paid in compliance with local labor laws, ensuring that social taxes and allowances are part of the package. These stringent labor laws could restrain the market. Other factors, such as growing dependence on existing clients and the growing presence of global firms collaborating with regional entities, pose a challenge for local firms.
• As COVID-19 spread and businesses became more worried about safety during the pandemic, facilities management services were an effective way to make the workplace safer.Moreover, facility management vendors focus on product innovations to overcome the pandemic challenges.
• The presence of significant facility management vendors and the growing adoption of emerging technologies boost market growth. Post-pandemic, there is an increase in the demand for FM services; however, the focus shifts from residential to commercial property services as the employees return to work and firms focus on healthy workspaces. There has also been an impact of the Russia-Ukraine war on the overall packaging ecosystem.

• As facility management accounts for 30 percent of a company's expenses, outsourcing this to a third-party certified vendor is a way to optimize end-user costs. Use cases that suggest an optimized 20–30 percent cost on FM due to outsourcing generating a positive impact on the company's income between 6 percent and 9 percent have been evident in the region.
• Also, the rise of technology is clear in the global FM scene, where monitoring equipment and the environment to plan scheduled maintenance and other tasks is becoming more important.In Qatar, vendors such as Sodexo are equipped to help a business reduce its energy costs by six-figure amounts, enabling the end-users to contribute to reducing carbon emissions.
• Additionally, the Qatar Green Building Council was launched to increase awareness and knowledge of green building practices in Qatar. Owing to this, several IT companies and corporate offices of manufacturing companies in the region have invested in sustainable development, which has driven the demand for facility management solutions in the country. ​
• From the point of view of vendors, Qatar's FM landscape is more dominated by those who offer single or bundled services rather than those who offer integrated services.Since high concentration levels are a sign of strong competition, the integrated service space is likely to have room for new companies or companies that want to offer more services.
• Over the years, outsourcing more FM functions has coincided with a shift from service bundling to service integration or integrated facility management, sustainability management, and workplace management. However, the lack of a consistent regulatory framework for the facility management industry has been cited as one of the critical challenges FM providers face with the steady rise in large-scale conglomerates.

• Qatar is among the leading FM markets in the GCC region, according to IWFM. Infrastructural development and the focus on "green building" have driven the market for FM services in the region. The market in Qatar can be categorized as a "high customer awareness" market, considering the changing lifestyles and the increasing demand for outsourced FM services.
• Qatar is said to be one of the places where construction spending is the highest in the world, which keeps the industry growing steadily from year to year. Infrastructural spending has kept the construction industry in the region on a growth path for the last two years. In the next few years, the fast-growing construction industry in Qatar is likely to help facility management grow faster in the hard services category. These services ensure optimum comfort and convenience for residents, employees, and visitors. These services include plumbing and HVAC maintenance, both of which require technical knowledge.
• The QGBC promotes sustainable business practices that balance environmental, financial, and social factors. These practices are meant to help organizations become more sustainable and make it easier for them to reach their main goals.
• The government invests heavily in infrastructure development to enhance its economic growth prospects. In its recent budget, Qatar's Municipality and Environment Sector allocated $7.0 billion to many significant infrastructure projects, including water and electricity networks and roads.
• For example, Msheireb Properties, a branch of the Qatar Foundation, is working on the USD 5.5 billion Msheireb Downtown Doha project as part of the National Vision 2030 plan. The project wants, among other things, to cut down on the amount of energy used and the country's carbon footprint. Thus, these green initiatives make room for FM services, which are mostly outsourced, because the organization can focus on its business operations and let third-party vendors take care of building maintenance.
• Moreover, the Public Work Authority (Ashghal) plans to spend USD 380 million to improve the country's highway system. With this highway plan, the authority planned to build a 195-kilometer-long direct road to connect Al Khor in the north and Masaieed in the south. Moreover, recently, railroads have experienced a demand for facility management. The Qatar Integrated Railways Project covers four metro lines in Doha, tram routes in West Bay, the Lusail high-speed line, and dedicated freight airways.

There are a lot of regional and international players in the GCC facility management market, so it is not a unified market.The major players, such as Sodexo Qatar Services, G4S Qatar SPC, Al-Awsat United Real Estate Co., Interserve plc, EMCOR Group Inc., and many others, have adopted various growth strategies, such as mergers and acquisitions, new product launches, expansions, joint ventures, partnerships, and others, to strengthen their position in this market.

Agility, which is based in Kuwait and is one of the largest logistics companies in the Gulf, signed a new credit facility for 1.4 billion euros in August 2022. This money was used to pay for the company's growth plans, such as buying the British aviation services company John Menzies.

In June 2022, UAE-based ServeU, a facility management solutions provider subsidiary of Union Properties, partnered with Microsoft to upgrade its computer-aided facilities management system using Microsoft Dynamics 365 Field Services.

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