South Africa Facility Management Market - Growth, Trends, COVID-19 Impact, and Forecasts (2022 - 2027)

South Africa Facility Management Market - Growth, Trends, COVID-19 Impact, and Forecasts (2022 - 2027)

The South Africa Facility Management Market is expected to grow at a CAGR of 5.65% during the forecast period 2022-2027. South Africa's facility management industry operates with integrated contracts provided by significant global vendors and small local players focussing on single contracts and single-service solutions.

Key Highlights

• Increasing demand for outsourced facility management, infrastructural developments, and investments in the private sector are some of the key drivers responsible for market growth. Services in the FM industry have been commoditized to a great extent. Also, end-users are very price-sensitive, and contracts are thus aimed at shorter terms. A real estate over-supply has been creating pressure on rent yields, thus leading the customers to cut costs on FM services.
• South Africa's population growth, economic dynamism, and rapid urbanization are also expected to generate business opportunities, provided that investments are made to enhance infrastructure and regional connectivity, in line with the Africa Union's Agenda 2063.
• With the outbreak of Covid-19, the facility management market in South Africa is expected to witness a slight decline in growth. During the initial phase of the virus outbreak, the imposed lockdown led to a workforce shortage across the FM companies as the majority were non-local.
• A significant trend in the adoption of Specialized area-based services has been recorded in lieu of the unprecedented demand for computing capacity following a sudden and significant shift to online working due to the COVID-19 pandemic. Various domestic vendors have observed a rise in specialized cleaning for the booming data center business.

Key Market TrendsOutsourced FM is Expected to Hold a Significant Market Share

• The outsourced facility management sector in South Africa is supported by integrated contracts from major international suppliers and small local businesses that concentrate on single contracts and single-service solutions. The main factors influencing the overall market growth include rising demand for outsourced facility management, infrastructure improvements, and private sector investments.
• The demand for contracts, single, bundled, and integrated FM services is growing in South Africa. The South African government is developing new construction plans to increase demand for outsourced facility management services.
• The growing application of facility management in commercial buildings, infrastructure, and industrial projects is driving the market's growth. One of the major factors driving the facility management market is growing construction activity. For Instance, South Africa invested heavily in constructing ports, railways, roads, and airports. For large-scale projects, outsourced facility management services will bring new opportunities to the market studied.
• Moreover,In September 2021, the launch of FM Solutions Technical, a new specialized division dedicated to providing technical maintenance services that cater to their client’s needs, has allowed FM Solutions to increase its range of services. The key strategy is to ensure that the service offering is more value-based and aligned to operational efficiency. This strategy is especially applied in client environments and the company’s business for the betterment of the services on both sides.
• As more businesses adopt digital technologies into new workplace cultures, there is an increase in the demand for technology-enabled FM solutions, particularly from the banking, financial services, insurance, and healthcare sectors.

Public/Infrastructure Segment is Expected to Drive the Market

• According to the Construction Review Online, in May 2022, the government of South Africa has gazetted details of 51 top priority infrastructure projects in South Africa that have been declared strategically important and will be fast-tracked to secure the necessary approvals before August 2022. The projects are expected to start upon the issuance of the relevant tenders.
• Some of the approved projects under waste & sanitation, energy, and transport sectors include the Vaal River System Phase 2 of the Lesotho Highlands Water Project: Gauteng, Phase 2A of the Mokolo Crocodile River (West) Augmentation Project: Limpopo, Emergency/Risk Mitigation Power Purchase Procurement Programme (after installation, these sustainable energy producers should deliver 2000MW in power), etc.
• As of May 2021, the South African government has a portfolio of more than 93 000 buildings, and its traditional approach to property management has been to steer funds towards upgrading derelict buildings at huge capital costs, instead of directing enough funds towards the preservation of assets.
• According to the International Monetary Fund, the GDP of South Africa took a hit in 2020 amounting to just USD 335.34 billion but quickly bounced back to USD 418.02 billion in 2021. IMF also forecasts that the GDP of the country is expected to cross USD 513.41 billion by 2027. These developments are expected to drive the demand for facility management in the country.
• Infrastructure segment is one of the prominent segments that contributes a good share in facility management of South Africa. This segment is owing to the rapid infrastructure development and rising demand from hotels, retail outlets, malls, and office buildings in the country.
• For instance, in August 2021, Radisson Hotel Group announced the plan to open its 16th hotel in South Africa. Radisson Hotel Middelburg is set to open at the end of 2023 in Middelburg in the Mpumalanga Province.
• Moreover, the Boardwalk Mall is a new shopping centre being constructed within the Boardwalk precinct in Port Elizabeth, South Africa. The new shopping mall is being developed in two phases with an investment of USD 36.2 million. Construction of the Boardwalk mall commenced in May 2021. The official opening of the mall is scheduled for September 2022 which will mark the completion of the second phase. Such developments are boosting the economy of the country as well as providing new opportunities for the domestic facility management companies.

Competitive Landscape

The facility management market in South Africa is moderately fragmented due to the presence of local players and small to medium-sized firms. These major players have adopted various growth strategies, such as new product launches, expansions, joint ventures, partnerships, and others, to strengthen their position in this market.

• January 2022 - The BUTEC Group announced the signing of an agreement for the acquisition of all 17 companies of the ENGIE Group in Africa. All these companies operate in the fields of facility management, energy efficiency, maintenance, and ventilation, among others.

Additional Benefits:

• The market estimate (ME) sheet in Excel format
• 3 months of analyst support

Please note: This publisher does offer titles that are created upon receipt of order. If you are purchasing a PDF Email Delivery option above, the report will take approximately 2 business days to prepare and deliver.