Home Entrepreneurship Profiles of two facilities management companies in Lebanon


Profiles of two facilities management companies in Lebanon

by Lauren Holtmeier

Buildings do not run themselves. Lights must be changed, air conditioner units must be fixed, accounts kept in order, invoices sent, and so on. The list is long and tedious, and, in some cases, outsourced to a facilities management company. Facilities management is not just about lights and air conditioner units, however, it also encompasses the more complex aspects of energy management through identifying potential ways to reduce energy costs and increase efficiency. Globally, the sector “is forecast to record good growth, particularly in the Middle East and Asia-Pacific,” according to the 2018 Global Facilities Management Market Report (GFMM). The report estimates the total global facilities management market to be worth $1.15 trillion, with the outsource facilities management market at $466.5 billion. However, the GFMM does not include Lebanon, surveying only stronger Gulf economies, such as Saudi Arabia and the UAE, and attributing their growth to increased construction and an outsourcing culture. A report by the London-based market research company Technavio estimates the Middle East market specifically will grow by $29.9 billion from 2019 to 2023. Questions of how much sector growth can be expected in Lebanon arise when recalling the country’s real estate sector saw a decline at the end of 2018. (Real estate transactions dropped by 17.44 percent in 2018 compared to 2017. In Q1 2019, they fell 5.05 percent from the previous year). Other factors include the general sluggishness of Lebanon’s economy and expected growth rates under a single percentage point this year. From Executive’s own research, evaluating the potential market penetration of facilities management companies that would seek to enter the Lebanese market is complicated by the fact that both companies surveyed below derive their business from captive units.

Facilities management in Lebanon is not a new trend. A 2014 BankMed report noted that there was a “rising demand for complex services including facilities management,” while companies like Operators and Sodeco Gestion have been around since the early 2000s. But to this day, the facilities management market remains relatively small, with many buildings still managed informally with a natour or concierge handling day-to-day operations. What has changed in the past five years, is that those companies that are operating formal facilities management have begun to integrate sophisticated technology, like drones and the Internet of Things into their operations. 

The companies Executive surveyed focus primarily on retail and commercial spaces. In terms of maximizing efficiency, these companies, and companies globally, look at ways to monitor and reduce energy use, and so have developed and integrated sophisticated technology to help them monitor, manage, and facilitate transactions and maintenance requests online. 

Tech seeping in

Technology for the companies surveyed below has already begun to replace some human capital costs as drones now perform inspections, and the presence of maintenance request apps eliminates the middleman. Given the lack of data available, it is impossible to gauge a sector ratio between the cost of low-skilled labor and high-skilled staff, such as engineers, and cost of tech. While technology can include high initial investments, these companies tell Executive that they have seen good returns. Technology never tires, and it is more lucrative to have one employee making sure drones are flying or monitoring the condition of air vents through the Internet of Things than it is to have four or five workers checking and maintaining these things on a scheduled basis. With technology seeping into every aspect of modern life, it is no surprise it has found its way into facilities management, and as it continues to reshape how humans live their lives and how business is done, technology will likely continue to mold the facilities management industry—and those who can effectively utilize the latest tech will have a competitive edge over their less advanced competitors.

Enova, based in Dubai and operational in seven countries in the region, has three major contracts in Lebanon including City Centre Beirut, Carrefour, and WaterFront in Dbayeh. In Lebanon, nearly all of Enova’s portfolio is comprised of companies at least partially owned by Majid Al Futtaim, which operates Enova. Facilities management demands a heavy hands-on presence to make sure day-to-day operations run smoothly, but Operations Director Amin el-Najjar tells Executive that Enova has invested heavily in technology that helps eliminate human capital costs and streamline the workflow in the field. While he declined to specify how much has been invested in new technology, he says that they expect to see a return on investment in two to two and a half years. Through the Hubgrade monitoring system, all facilities are observed at one central location in Dubai. When a request is made through the central system, a technician receives a notification and is dispatched to perform maintenance. Even for certain maintenance aspects once performed by contractors, Enova relies on technology. For example, thermal imaging drones are responsible for ensuring solar panels are properly functioning. Part of facilities management is identifying areas to reduce costs, and this often includes energy costs. “The cheapest energy is unused energy,” says Najjar. He says that during audits they first identify ways to reduce energy use, and then try to supplement use with green energy—and in this region solar is often the answer. Enova has begun implementing condition-based maintenance, a type of maintenance in which repairs are only made when indicators show wear-and-tear rather than scheduled fixes. Najjar says that this is done by connecting their systems through Internet of Things and has reduced maintenance costs significantly. On the costs associated with integrating such advanced technology he says, “Technology drastically reduces the number of people required to do a job, and it makes it easier for us.” From monitoring to maintenance, technology is an integral part of Enova’s operations. Further, a digital dashboard gives building administrators access to data online that includes a building’s energy use and open requests. For tenants, an app is available on which they can request maintenance projects and cleaning services.

LifeQuo

For three generations, the Mouawad family has been active in the construction and development sector. Paul Mouawad, LifeQuo’s founder, says his grandfather started the family line of business during reconstruction after the Lebanese Civil War. The second generation followed with real estate development, and the youngest of the three Mouawads took over the facilities management side of operations. “We had to think of long-term sustainability, so we developed a facility management [aspect] to take over the projects the previous generations built,” Mouawad says. Originally, the facilities management service was part of Mouawad Investment Group, but LifeQuo was a natural splinter from its sister company under the Moawad Investment Group holding company and is owned in full by the youngest Mouawad. Currently, they manage around 15 properties in the Beirut Central District, of which nearly 80 percent are buildings that the Mouawads built. Mouawad says that while they are actively expanding their portfolio, they are being selective in their projects and seeking to have more clients in Downtown. He says this is in part because he knows clients in this area will make payments on time, and this target market is more familiar with the concept of facility management than in some other areas. The other part, he says, is that LifeQuo is focusing on providing high-quality services and boosting recognition, rather than focusing solely on making money. He says that by building a solid reputation, this will hopefully, in turn, help in raising profits in the long term. LifeQuo is split into three parts that include management of the entire building, the umbrella of the organization, service provision, and a real estate brokerage component. Mouawad says where other companies make money on the services provided by hiring subcontractors, LifeQuo has an internal servicing company to do maintenance directly. Maintenance requests are handled through an app, launched in 2016, that Mouawad says he developed when trying to identify how to give his company a leg up on others in the field. He adds that while the app is currently for LifeQuo’s clients’ use, they are devising a marketing campaign and intend to make it public.

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Lauren Holtmeier

Lauren Holtmeier holds a masters of International Affairs from the Bush School of Government and Public Service at Texas A&M and has worked on refugee issues at the American University of Beirut.
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