Growing pains

The FM Expo is launching its inaugural Saudi FM Summit in March 2011

The Saudi FM market will be worth $100 billion over the next 25 years.
The Saudi FM market will be worth $100 billion over the next 25 years.

The FM Expo is launching its inaugural Saudi FM Summit on March 1-2, 2011, in Jeddah, which will address key issues facing facility managers in KSA and help promote the industry to developers, the real estate market and wider construction industry.

The facilities management industry in Saudi Arabia will be worth between $1.5 and $2 billion by 2014, making The Kingdom one of the fastest growing FM markets in the world, according to organisers of the FM Expo, which is launching an inaugural FM Summit in Jeddah next month.

However, with only a handful of local companies currently in the market, a panel of consultants for the summit predict a shortfall in suppliers that can service the 687 current developments, 22% of which are in the execution phase.

Research was carried out by the FM Expo which compiled data from BIFM, IFMA, FMA, Musanadah FM and Frost & Sullivan and compared the rates of growth between 2009 to 2014/ 2015.

One such consultant to the FM Expo is speaker Mick Dalton, managing director, Musanadah Facilities Management, which is based in Saudi Arabia. Musanadah FM is a subsidiary of Khalid Alturki group, a Saudi-based investment and development company and is one of two sponsors of the event, including The Jash Group.

“Development in Saudi Arabia continues to grow at an astonishing pace and research suggests the Saudi Arabian FM market will be worth $100 billion over the next 25 years. But the market only has 10 local companies to date and no matter how big they can become, they will never be able to match the market demand without an increase in competition,” he said.

According to Dalton, FM needs to address the importance of adopting best practice during the industry’s infancy.

“A lot more innovation is required at the outset. For example, Saudi Arabia is targeting between seven and 10% of its electricity to come from renewable sources by 2020 and this mandate is filtering down into construction,” he said.

“In turn, facility management providers have to contribute and offer ways and means to help developers meet their environmental targets once a building is finally complete. This means an increased use of integrated management systems and better implementation of technology.”

As part of the Saudi FM Summit, The BIFM (British Institute for Facilities Management) will be running accredited training courses.

“In 2010, the Saudi Arabian General Investment Authority (SAGIA) achieved its goal to become one of the top 10 most competitive economies in the world,” said David Wilson, director, FM Expo.

“Such success has been driven by ambitious construction projects but now it’s critical that these and future developments are supported by facilities management. That is why dmg :: events is launching the Saudi FM Summit; to provide a platform for networking between the construction industry and facilities management industry and through an accredited training programme to promote best practice.”

One of the courses at the Expo is Understanding & Managing Building Engineering Services in Saudi Arabia, presented by Ian Cramp BIFM.

Cramp will provide guests with up-to-date information on global best practice for understanding and managing building services in Saudi Arabia, which includes heating, ventilation, cooling, lighting, utilities, energy management and lifts.

“These services are not only a significant expense area but often a source of major problems affecting morale, health and safety, productivity and costs,” he said.

“This course will provide guests with a basic understanding of how these services work, how to cost effectively manage them and how to work confidently and effectively with contractors and technical support staff.”

Riyadh residential market
The Riyadh real estate market is reaping the benefits of the Saudi Government’s regulatory reform and investment in infrastructure, said Jones Lang LaSalle.

The real estate firm has written a report called Riyadh City Profile, focusing on the office, residential, retail and hospitality market segments of the city.

“Saudi is witnessing strong economic growth on the back of government investment and stronger than expected population growth,” said John Harris, co-head Jones Lang LaSalle.

“In Riyadh in particular, we have seen major investment in the King Abdullah Financial District and the Princess Noura bint Abdulrahaman University. These developments have been leading a general northward shift of activity in the city.

“The outlook is very positive with major government and private projects well underway across the residential, office, retail and hotel markets.”

John Moore, FM division head, The Jash Group, added that in developed markets such as the UK, facilities management was once considered to be delivering services at the lowest possible price with no consideration given to long-term costs or value for money.

“To a degree, Saudi Arabia is at that point now except here we have the benefit of hindsight and can learn from where the developed markets have reached and current international standards,” he said.

“We can guide the KSA market from a service delivery culture into a strategically led value for money one. But we need to ensure the fundamentals are in place through knowledge and by promoting best practice in management and procurement processes. Only then can we begin to professionalise the industry and promote facilities management as a vital part of any business infrastructure.

“The Saudi FM Summit offers the opportunity for companies like Jash Group and our Malaysian partners Global Facilities Management to raise awareness of the issues in KSA at an early stage in a fast developing market.”

According to Harris, the residential sector is in a strong upswing of the market, with the 2010 national census indicating population growth greater than expected. This combined with higher immigration into the capital for employment and education is driving demand and creating opportunities across various market segments.

He said the availability of affordable housing remains an issue and is exacerbated by demographic shifts and the increased number of low income expatriates.

Also, the office market will see approximately 200,000m2 of new office space completed in 2011. However a large proportion of this does not meet typical corporate requirements for safety and parking.

“As the CBD and central areas fill with development, access to parking is becoming an increasing problem for a population that relies on cars.

Demand however is keeping pace with supply and vacancy levels remain around 10%. Average office rents have declined during the year with older buildings and those outside the CBD seeing the largest falls,” added Harris.

Riyadh’s current stock of retail space is estimated by Jones Lang LaSalle to be around 2.7 million m2, and this is expected to rise to over 3 million m2 by 2014.

Strong growth in consumer spending has meant demand for space from retailers remains strong, however the expected growth in large new retail centres will take some time for the market to absorb.

“We expect rents in prime locations will continue to rise against falls in less sought after and peripheral areas of the city,” said Harris. “With the exception of the new wing of the Al Faisaliah Hotel, the hotel market saw no additions in 2010. The next two years however, will see significant growth, primarily through the addition of new hotels from regional and international branded hotels.

“Demand for hotels rooms is predominantly driven by government bodies and business travellers. The decline in average occupancy rates in 2009 has continued into 2010, with the exception of five star properties which have consistently outperformed the market.

“Jones Lang LaSalle predicts a relatively stable hospitality market in the coming year with a slight risk of over-supply in the medium term as new properties come on stream,” he added.

For details of the Summit, call David Thompson, project manager, dmg :: events on 04 438 0355or email davidthompson@dmgevents.com. The event is held in conjunction with the Big 5, KSA, Jeddah Centre for Forums & Events, February 27-March 2.

BIFM
The British Institute of Facilities Management is the national professional body for FM in the UK. It was formed in 1993 and is currently serving over 12,000 members, including overseas practitioners.

BIFM Training runs the Institute’s programme of short courses which offer development opportunities for FM’s looking to improve their knowledge, skill and professionalism.

For information visit www.bifm-training.com or www.bifm.org.uk 

Why Saudi?
Development in Saudi continues to grow at an astonishing pace, especially within the construction and FM sectors.

The Saudi Arabian FM market will be worth $100 billion over the next 25 years.

In 2010, the Saudi Arabian General Investment Authority (SAGIA) achieved its mission to become a top 10 most competitive economy in the world Saudi Arabia is set to float tenders worth $4.5 billion (SR17 billion) to build a new airport in Madinah and a commercial centre near Jeddah airport King Abdullah Economic City, Sudair City Development and the Princess Noura bint AbdulRahman University for Women are just three of several multi-billion dollar projects currently taking place.

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