Views and outlook on the Facilities Management sector for 2020

The view persists that Africa remains the next big market for multinationals, mergers and acquisitions, even in the face of changes in regulatory framework and global economic instability. Overview and reflections on 2019 2019 saw an increase in the use of technologies such as building management systems, machine learning and data analytics for data miners […]

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The view persists that Africa remains the next big market for multinationals, mergers and acquisitions, even in the face of changes in regulatory framework and global economic instability.

Overview and reflections on 2019

2019 saw an increase in the use of technologies such as building management systems, machine learning and data analytics for data miners by FM companies.

As there are low barriers to entry in some of the subsectors of Facilities Management, there was an increase of new entrants into security, cleaning and office services, posing a challenge of non-compliance with quality standards and legislation. Going into 2020, there is a need to address compliance to regulation to ensure the sustainability of these sectors and compliance to the stipulated wage rates for the workforce.

There has been a growing interest around the development of smart cities in sub-Saharan Africa, but this was subdued by global contraction in critical human infrastructure projects and policy uncertainty. The major contributing factor to policy uncertainty can be attributed to general elections taking place in most countries within the continent, yielding to a decline in investment appetite. However, these have not deterred market optimists as infrastructure development and smart cities remain an area of focus for governments and property developers.

The national Department of Environment Forestry and Fisheries (DEFF) introduced some changes in the legislation such as the Biodiversity Act and the Regulation to Phase out the Use of Organic Pollutants, along with the proposed Amendment to the National Greenhouse Gas Emissions reporting regulations. These are some of the State’s interventions that going forward should encourage property managers to select experienced FM Service Providers who are sensitive to environmental sustainability.

 

Waste management remains of deep concern to South Africa. According to the State of Waste Report (SoWR) by DEFF, roughly 42 million tons of general waste is generated yearly, with only 11% of waste recycled or recovered for other usage (not accounting for other waste specifications). This has presented opportunities for FM providers and we see this trend continuing into 2020 and beyond.

Expectations and view of the FM sector in 2020

Technology and innovation will continue to transform the Facilities Management industry, we anticipate between 6% and 10% growth in hard services in the sector.

Infrastructure development and smart cities remain an area of focus for governments and property developers as evidenced by the number of bids such as the Bisho PPP and Kopanong coming out as we close 2019.

Servest conducted research around FM trends that will shape the year ahead and identified six innovations that will continue to disrupt the evolving FM landscape.

Among these are:

The Internet of Things (IoT), as it has become the driver to enable automaton and connectivity in buildings and facilities. For those who can leverage its full potential, it will play a significant role towards cost reduction, improved efficiency, as well as strategic positioning across the infrastructure development and real estate management.

Drones are changing the way in which the world works, from healthcare to transport and logistics as well as FM. With a vast number of applications in the FM industry, Drones can be used to improve speed of execution, quality of service as well as operational, financial and safety performance.

There has been interesting innovations around Heating, Ventilating and Air Conditioning (HVAC) systems, especially among forward thinking FM companies that understand the impact of HVAC in providing comfort in the workplace. Energy efficiency, predictive maintenance regimes and machine learning contribute significantly towards cost savings and environmental benefits.

Real Estate investment will intensify in 2020 as a means to catch up with the 2019 infrastructure backlog, and in turn the demand for professional FM expertise is expected to increase proportionately.

Cloud-based FM solutions will also increase, as a result of growing usage of mobile applications as well as an increase in utilisation of virtual and shared workspaces.

We expect Automation, Artificial Intelligence (AI) and robotics to continue to grow in 2020. Although the impact of the Fourth Industrial Revolution (4IR) remains a challenge, especially for a country with one of the highest unemployment rate figures, the reality is that use of automation and robotics will continue to rise. The onus is upon employers and governments to work together to develop the necessary skills required for a 4IR-ready workforce.

We also anticipate an increase in safety and security innovations, and large investments channelled towards safety, security and access control innovations such as facial recognition and biometrics. Thought leaders will begin to explore opportunities for partnerships and collaboration to leverage the full potential that technology presents in this space.

These innovations will enforce integrated solutions thinking in facilities design, resulting in increased maintainability and cost optimisation for our clients. We anticipate more design focus on space optimisation, energy efficiency, environmentally friendly buildings, and embracing digital transformation.

Consolidations and partnerships

Mergers and acquisitions, collaborations, partnerships etc. across the continent are expected to continue to grow as multinationals still consider Africa a viable investment destination with great potential.

Through consolidation and partnerships, some companies have increased their market share in the FM space. Those that have executed value-adding acquisitions in the technology space are enjoying the fruits of those partnerships.

There is a more conscious drive by property developers and facilities management companies to ensure that expert green and energy efficient solutions are applied from development phase to completion; these collaborative relationships will be critical in FM in the future. This is evident from the increase in Public-Private Partnership (PPP) opportunities in the pipeline.

By Thami Moatshe

 

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