NETWORKING BREAKFAST MORNING September 11, 2019 8:30am-11am Dusit Thani Hotel Networking Event Sponsor
FM Industry Market Pulse Hosted by the MEFMA Strategic Sub-Committee Francisco Ramalheira Director – Business Development & Marketing, Enova (MEFMA Strategic Sub-Committee Leader)
MEFMA Strategic Sub-Committes Regional Legislation and Regulation in FM – Networking event April 15 th Industry Body collaboration and co-operation FM companies and Licensing requirements Regulation / Standardization of Regulations Best Practices and Innovation in FM – Networking event June 26 th Framework document development Classification of buildings / businesses Innovation as a deliverable FM Industry Market Pulse – Networking event September 11 th Value of Human Capital & Training in FM – Networking event December 12 th
FM Industry Market Pulse Regional Market Overview Geographies Segments Maturity Opportunities and Challenges FM Market Landscape Segmentation Evolution Who and How? Trends in FM Competitiveness Blockchain AI / Blockchain / Data driven decision making Energy Management Smart Facilities Flexibility and Wellbeing in the workplace
FM Industry Market Pulse Regional Market - Overview* Kuwait – 5 Total market value – 1.0 biUSD Private – 63% and Public – 37% Inhouse FM – 50% Egypt – 4 5% Outsourcing as IFM Bahrain – 6 Total market value – 1.6 biUSD Total market value – 0.8 biUSD Private – 56% and Public – 44% Private – 67% and Public – 33% Inhouse FM – 80% Inhouse FM – 42% Outsourcing as a single service Qatar – 3 8% Outsourcing as IFM Total market value – 3.9 biUSD Private – 69% and Public – 31% Inhouse FM – 39% 10% Outsourcing as IFM UAE – 2 Total market value – 5.4 biUSD Private – 77% and Public – 33% Inhouse FM – 35% 10% Outsourcing as IFM KSA – 1 Oman – 7 Total market value – 5.5 biUSD Total market value – 0.3 biUSD Private – 67% and Public – 33% Private – 60% and Public – 40% Inhouse FM – 62% Inhouse FM – 57% 8% of Outsourcing as IFM 7% Outsourcing as IFM * Frost and Sullivan, 2018
FM Industry Market Pulse Regional Market - Segmentation Market value [miUSD] 6000 5000 FM potential growth to 2% of GDP 4000 KSA – 0.8% – market could double in size UAE – 1.3% – market could grow 50% 3000 Qatar – 2.2% – market plateau Egypt – 0.7% – market could more than double in size 2000 Kuwait – 0.8% – market could double in size Bahrain – 2.2% – market plateau 1000 Oman – 0.5% – market could triple in size 0 KSA UAE Qatar Egypt Kuwait Bahrain Oman Commercial Institutional Public Industrial Others Commercial – office buildings, retail, F&B, warehouses Institutional – healthcare and education Public – government offices, airports, ports roads, railway as well as utilities Industrial – manufacturing and primary energy operations Others – leisure, entertainment, sports, theme parks * Frost and Sullivan, 2018
FM Industry Market Pulse Regional Market – Maturity (1/2) 1. UAE – the least fragmented market from the group, extremely competitive, with a number of developers / portfolio managers with their ability to perform the FM spectrum of services. There is a clear push for differentiation, innovation and value added services, which could lead to a situation of market desaturation. 2. Qatar – there is momentum created around outsourcing where a IFM models are used often across all segments. Market is clearly dominated by regional FM players with local companies having been established with international groups via local partnerships. 3. Bahrain – a small and relatively competitive market due to the number of FM service providers that is lead by the easy establishment of corporation. Most opportunities rely on the private sector where there is awareness about FM in general. 4. KSA – very fragmented market, where some commercial opportunities are still centered in input based contracts. Opportunities for the FM market in the public sector rely more and more in output based contracts based on the vectors set by Vision 2030. KSA seems to be converging faster in the last years using the UAE as a benchmark.
FM Industry Market Pulse Regional Market – Maturity (2/2) 5. Kuwait – a market that historically relied on input based contracts but with the investment on the private sector (notably hospitality and mix use developments) and the demand around customer service improvements is driving positively the FM sector. 6. Egypt – a promising market for three main reasons: economic development, willingness to outsource and the relatively low level of proficiency on service delivery. International companies have difficulty to compete locally and require a service methodology that offers value added services. 7. Oman – offers immense opportunity if all development programs remain on track. The market is immature and local work force vacuum to the public sector pegged with low penetration of technology on the building sector remains a challenge.
FM Industry Market Pulse Regional Market Opportunities Challenges The regional growth – GDP set to grow Competitiveness between 2-4% Market saturation Public but mostly private development and investment will continue to occur – Attract talent which eventually creates opportunities in the FM sector Change of law Eagerness for “purchasers” to learn about Geopolitical situation and outsource FM services Divestment Demand for digitally enabled solutions Provision of added value services
FM Industry Market Pulse Competitor Landscape – Segmentation Environmental management and compliance Waste FM Consultancy Delivery O&M Services (Hard FM) M&E Value Added Services ITC Property Management Support Services (Soft FM) Cleaning T&C Establishment Asset management strategies of IT management infrastructure HVAC Pest control PAT testing Recycling Budget Leasing services preparation Maintenance of Mechanical Landscaping Drone and service ITC systems systems inspections Space planning charges Energy allocation Security Management System Building fabric Condition audit Authorities integration surveys liaising Design review Reception Water services Fire detection services treatment and Digital tools and Green building recovery Processes and development protection certification Property Procedures Catering acquisitions development (…) (…) and disposal BMS Indoor air Laundry quality Development auditing and (…) supervision Vertical (…) monitoring transportation Transitional (…) services (…) 7 main segments but often companies provide services beyond the traditional definition of FM
FM Industry Market Pulse Competitor Landscape – Segmentation Volume driven business Specific opportunities (Hard, Soft and EMC) (Value added, ITC, PM, FM Consultancy) Across the 7 geographies portrayed we Limited number of companies because estimate the presence of over 100 services delivered are specific companies Typically and because of the nature of the Less than 10 companies operate in more service delivery methodologies and than 1 country market opportunity these companies operate across the 7 geographies With some exceptions decision is made based on price - commoditization Commissions are of added value so decision making is based on technical We estimate than more circa 90% of the capability and after sales support FM market value is here Market value is smaller but typically with better margins
FM Industry Market Pulse Trends in the FM industry Competitiveness Purchasing pressure as led to a commoditization of the FM industry with companies having to optimize operating strategies to remain successful. Mature companies are adopting a proactive approach on the development of strategic partnerships, on value creation (rather than just service delivery) and leveraging on the use of technology. Blockchain This disruptive technology, defined as a cloud-based, permanent, distributed digital ledger of activities between parties can enable real-time visibility and security in contractual obligations and accelerating transactions while enhancing accountability. Challenges remain with the transition from an non-existing or diversified information status into a fully integrated mode – structure, fields, language, permissions, etc.
FM Industry Market Pulse Trends in the FM industry Artificial Intelligence AI has developed rapidly over the last few years with the major advances being in the area of “deep learning” techniques that employ multi -layer artificial neural networks to model complex real-world situations. This could lead to the adoption of AI to model complex processes with the aim of optimizing them, segregation of duties between human and machine and allocation to what they do best, and development of complex predictive models that map solution scenarios. Energy Management With the rapid increase on utility prices, the environmental pressure around traditional solutions to generate utilities and with the creation of Super ESCO’s, utility management in general is a service required / offered by FM companies, creating multiple opportunities within the sector.
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