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£15 billion sales boost for FM market – report

Published 21st September, 2020 by Neil Nixon

£15 billion sales boost for FM market – report

A new report on the UK facilities management market from MTW Research concludes that outsourcing is set to outperform the UK economy in 2020, with 85% of FM contractors having healthy finances despite the COVID-19 pandemic.

Based on data from 80% of the FM market, the report forecasts a return to pre COVID-19 sales faster than initially expected, with revenue exceeding 2019 levels by H2 2022 with a 10% sales boost. MTW identifies key changes in the FM market due to coronavirus, highlighting a ‘paradigm shift in the outsourcing market in 2020 as the FM market refocuses and rebalances’.

Analysing the impact of Brexit on the FM market, MTW found that £3 billion of potential growth has been lost due to uncertainties impacting on recent and near term demand for outsourcing. However, MTW points to the rapid changes in market demand due to COVID-19 and £15 billion of growth by 2024, meaning that any impact of Brexit on the outsourcing market is unlikely to be tangible.

At time of publication, the COVID-19 pandemic had resulted in total borrowing by the FM market rising by more than £5 billion in 2020, with industry liabilities now accounting for 46% of total FM market sales according to MTW. Whilst revenues for many IFM/bundled service providers remained reasonably resilient in H1 2020, industry net worth plunged by more than 60%. However, sources for the report identify this as a short term trend, with profitability set to rise by 24% between 2020 and 2024.

MTW’s analysis found IFM/bundled outsourcing the best performing sector in 2020, with sales set to return to pre COVID-19 revenue levels by early 2022, outperforming the overall FM outsourcing market. This sector’s ability to rapidly adapt to the COVID-19 crisis presented several unique opportunities for the IFM sector and associated suppliers.

MTW’s director, Mark Waddy, said: “The FM outsourcing industry can be characterised as a two-tier market in 2020. Sales briefly dipped below £100 billion for the first time since 2016, though this contraction was not borne evenly by all FM companies. There are new, fundamental opportunities for growth in 2020 though the number of pitfalls have also increased.”

The report is available to purchase from £595 from MTW Research’s website:

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