LONDON--(EON: Enhanced Online News)--Technavio analysts forecast the MEP services market in the Middle East to grow at a CAGR of more than 10% during the forecast period, according to their latest report.
The research study covers the present scenario and growth prospects of the MEP services market in the Middle East for 2016-2020. To determine the market size, the study considers revenue generated from commercial buildings, healthcare, residential buildings, government sector, and education.
Several investments made towards the real estate industry in the Middle East has resulted in the growth of the commercial sector in the region. There are many mega-scale projects in the region which have positively impacted commercial real estate activities. These projects include the establishment of commercial buildings such as corporate offices, retail malls, and hotels.
The mechanical, engineering, and plumbing (MEP) services market in the healthcare sector was valued at USD 1.62 billion in 2015 and is forecast to grow at a CAGR of 9.29%. This growth can be attributed to the construction of several modern healthcare facilities in the region. Residential and government buildings are not far behind the healthcare segment of this market. Most of this growth is due to the increasing oil prices, which have funneled investments from the oil industry to the construction industry.
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Technavio analysts highlight the following three factors that are contributing to the growth of the MEP market in the Middle East:
- Risk mitigation through outsourcing services
- Rising levels of urbanization
- Improved cost savings for businesses
Risk mitigation through outsourcing services
“End users in the Middle East who are investing in the MEP market are quickly realizing the benefits of outsourcing services. The quickly growing market is presenting an abundance of opportunities for the MEP services market. The MEP vendors are capitalizing this by training and sending workers with pre-requisite knowledge and skills to handle these activities,” says Bharath Kanniappan, one of the lead market research analysts at Technavio for automation research.
Outsourcing provides end-users with more time and focus on core activities, while vendors handle the responsibility and risks of the MEP services. Organizations sign contracts with specialized MED service providers to protect their investments. Another key advantage is that with outsourced vendors, training and operational costs can be minimized to a large extent, which ensures maximum profits.
Rising levels of urbanization
The total construction projects in Gulf Cooperation Council (GCC) alone amounted to USD 172 billion in 2015. Projects worth USD 2.8 trillion are in the pipeline in the Middle East. Some of the important mega-scale projects under progress are – Kingdom Tower, Harbor project, Abu Dhabi Marina, and Lusail City.
With such high levels of urbanization, mega-scale projects planned for the forecast period will generate a growing need for design, installation, operation, and maintenance of heating, ventilation, and air conditioning (HVAC), plumbing lines, water storage tanks, and other electromechanical systems in newly constructed facilities. As end-users increase their focus on improving the facility and providing modern infrastructure amenities, there will be increased demand for new contracts with MEP vendors.
Improved cost savings for businesses
End-users are slowly realizing the immense cost benefits that come with outsourced MEP services over in-house capabilities. They are outsourcing services to streamline their business processes in the long run. By utilizing specialized services by MEP end-users save 30%-40% of the overall cost associated with building operations.
Explaining it in more detail, Bharath says, “Cost savings arise as a result of technical expertise that lies with professional vendors only. With a high degree of urban development projects planned during the forecast period, end-users are involving MEP vendors in the project designing and planning phase regularly for the construction of an efficient, resourceful, and modern building facility.”
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