Unlocking value: Growth opportunities in Saudi Arabia's Facility Management Sector

Introduction

Non-financial assets constitute the majority of public wealth in most countries and the Kingdom of Saudi Arabia is no exception. Since the launch of Vision 2030, the Kingdom has seen real estate and infrastructure projects worth US$1.3 trillion, with contracts awarded totalling US$164 billion. These investments are pivotal to achieving ambitious Vision 2030 targets, such as:

Increasing non-oil government revenue to SAR 1 trillion
Boosting the Public Investment Fund’s assets to more than SAR 7 trillion
Having three Saudi cities recognised in the top-ranked 100 cities in the world
Raising Saudi Arabia global ranking in the Logistics Performance Index to 25
Enhancing the Kingdom’s logistics and aviation capacities to attract 100 million visitors annually
99.5% of population centres (including rural areas) covered with healthcare services

As these transformative projects come to life, the effective management of these assets becomes critical to realising their full value. This is where facility management (FM) plays a pivotal role. By integrating people, places, and processes in the built environment, FM ensures the operational efficiency, service quality, and longevity of these investments, strengthening sustainable urban development in the Kingdom.

As an organisational function, FM integrates people, places, and processes in the built environment to improve quality of life and core business productivity. It enhances operational efficiencies, service quality and asset longevity, ensuring sustainable, long-term value from Saudi Arabia’s extensive infrastructure investments.

In this context, the Saudi Facility Management Association (SFMA) hosted the International Facility Management Forum and Conference in Riyadh from 8 to 10 September 2024. This first-of-its-kind event gathered institutions, experts, academics, and decision-makers across sectors to exchange insights and global best practices in FM. Participants explored the latest advancements in the sector, focusing on digital transformation and strategies to enhance sustainability, efficiency, and performance.

Future outlook and opportunities

The growth of the Saudi FM sector is fueled by a synergy of international trends and local factors, including rapid urbanisation, large-scale upcoming events, and efforts to diversify revenue streams, particularly through tourism and industrialisation.

The competitive landscape in Saudi Arabia is evolving, shifting away from fragmented tactical service providers towards strategic mergers and joint ventures. This trend is especially pronounced as international firms increasingly consider entering the Kingdom’s FM market. The sector’s transformation is also creating opportunities for technology companies and consulting firms to introduce specialised offerings tailored to the FM industry.

Growth factors such as ESG goals and cost-reduction initiatives are interlinked and heavily reliant on advanced technology. As a result, there is a growing demand for innovative solutions such as IoT, AI-powered analytics, and automation to enhance operational efficiency and sustainability. Additionally, the market has seen a rising need for special matter experts to act as client representatives in managing FM suppliers, particularly as end users work to build their in-house capabilities.

Effective FM practices play a crucial role in improving end-user experiences, optimising energy performance, and ensuring resource efficiency. These enhancements not only help attract and retain tenants but also boost rental income and property valuations, underscoring the value of high-quality FM services in the Kingdom’s rapidly evolving real estate landscape.

Our recommendations:

Policymakers, decision-makers, and industry experts in Saudi Arabia’s FM sector should focus on several key areas to fully capture the industry’s potential:

Enhanced coordination: Strengthen collaboration among regulatory and government entities to address sector challenges effectively.
Standardised regulations: Establish industry-wide regulations to ensure consistent quality, transparency, and accountability. Key priorities include governing owners' associations to promote sustainable, effective community management and clear service charge protocols.

Strategic direction: Develop frameworks and best practices that align FM with Vision 2030, providing organisations with a roadmap for sustainable, value-driven strategies.
Improved standards: Enhance codes of practice to support sustainability and operational efficiency in FM management.
Comprehensive guidelines: Issue guidelines on SLAs, KPIs, budgeting principles, and technology evaluations to support informed decision-making and efficiency.
Sustainable asset development: Incorporate AFM strategies from the master planning phase to optimise long-term operational and sustainability goals.
Grading for contractors: Implement a grading system for FM contractors to ensure qualified service providers and minimise service-related risks.
Resource optimisation: Shift towards a skilled labour model, supported by advanced digital tools, to increase efficiency despite rising manpower costs.
Professional development: Introduce a training, development, and certification programme to elevate industry professionalism and expand local employment.
Community engagement: Establish communities of practice and nationwide FM events to encourage knowledge-sharing, creativity, and innovation across the industry.
Industry recognition: Launch annual awards to celebrate organisational and individual achievements in innovation and operational excellence.