Slovak Republic Facility Management Market - Growth, Trends, COVID -19 Impact, and Forecasts (2022 - 2027)

The Slovak Republic facility management is expected to register a CAGR of above 2.5% during the forecast period (2022-2027). Facility management (FM) encompasses management strategies and procedures for building management, infrastructure management, and harmonization of the work environment within an organization that helps a company to standardize services and streamline operations.

Key Highlights

• The growing commercial development activities in the country by key real estate developers are expected to provide opportunities for facility services. For instance, in March 2021, CTP, a commercial real estate developer, announced the acquisition of an industrial park in Zilina, consisting of existing buildings and land for further development, in a strategic location near Zilina airport. The new park will provide a leasable space of 145,000 sqm after completion. Also, CTP planned to invest €200 million over the next two years to expand its current Slovak portfolio of 460,000 sqm in 12 locations to 1 million sqm of lettable space.
• The increasing number of commercial establishments, growing focus on environmental sustainability, and increasing adoption of technology integration are expected to drive market growth. For instance, in 2021, the EIB signed five new operations in Slovakia with an investment of Euro 30 million to support regional investments in the country and help modernize and renovate infrastructure with improved energy efficiency and environmental protection.
• However, the companies that provide facility management services are facing issues of lack of managerial awareness among the professionals to adopt prerequisite technologies efficiently over time.
• The Covid-19 pandemic has severely impacted the country, which slowed down the industrial activities that affected the country's economic growth. However, the release of pandemic restrictions and the reopening of business activities are positively impacting the market's growth as the demand for facility services by commercial offices and retail businesses are gaining momentum.

Key Market Trends

Growth in demand of Office and Building Spaces and Leasing Activities

• During the covid-19 pandemic, the businesses operating in the country were slowed. However, post covid the office market has shown strong year on year growth. The public sector in the country has led to the office demand in Bratislava as a significant rise in new leases supporting the trend of occupiers seeking newly built office buildings to relocate. As a result of relocations, the developers are refocusing on leasing second-hand office spaces in the upcoming year.
• Moreover, According to Property Forum, the leasing transactions in offices increased in the fourth quarter of 2021 and reached a total of approx. 98,000 sqm, representing a 124% increase in leasing activity compared to the previous quarter.
• The expansion initiatives of commercial and office buildings in the countries supporting the growth of facility services in the country. For instance, Eurovea 2 obtained one of the largest real estate loans of Euro 116 million in Slovakia in recent years to construct the extension of the Eurovea shopping center and the adjacent Pribinova X office building.
• Furthermore, one of the largest IT companies has picked New Apollo, which is under construction by HB Reavis in Bratislava’s New Nivy zone, for its operation in Slovak and occupies 30,000 sqm of the building. Such initiatives will showcase demand for a wide range of facility services in the country.

Commercial End-User is Expected to Hold a Significant Market Share

• According to Property Forum, the total investment in commercial real estate in Slovakia reached Euro 478 million in the first half of 2021, equal to the entire volume of investment during the year 2020, which shows an increase of 6% over the year.
• This is mainly due to increased interest in the retail property segment. The pandemic has also brought increased interest for assets with fewer tenants over longer lease terms to retail investments. These include retail parks and warehouse units, which provide a similar level of risk as industrial warehouses.
• Despite the pandemic, the office sector is gaining investment in modern projects from international investors in the country. Hence, the demand for new office buildings is expected to continue.
• The increasing investment by the international investors in the commercial sector and growth in leasing transactions in the country for office spaces are projected to create demand for soft and hard facility services in the country.

Competitive Landscape

The Slovak Republic FM market comprises both local and international players possessing significant years of industry experience. The FM companies are incorporating technologies into their services, which are adding strength to their service portfolio. Moreover, several numbers of joint ventures/acquisitions and expansions were made by the vendors. Therefore, the intensity of competitive rivalry is high.

• April 2021 - Facility services provider company ISS has exited the Romanian market as part of a regional transaction that includes three more Eastern Europe countries. The company said that the divestments are in line with its strategy to simplify and focus its business on key account customers. The company sold its operations in the Czech Republic, Slovakia, Romania, and Hungary to Hungarian facility management company B+N Referencia Zrt.

Additional Benefits:

• The market estimate (ME) sheet in Excel format
• 3 months of analyst support

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