Tuesday, October 07, 2014

Gradual recovery in the UK wall cladding market

Including facing bricks, rendered block and insulated render systems, AMA Research estimates that the total installed wall cladding area declined from over 45m m² in 2008 to 39 m², before showing gradual improvement to 48m m² in 2012 and 2013.

Since 2011, there has been some improvement in private housebuilding output, social housing refurbishment, waste management infrastructure and the central London office market.

Driven largely by the Help to Buy schemes and a shift back from flats to houses, demand for facing bricks has outpaced supply, with imports needed to make up the shortfalls. This has been due to the time taken to restart ‘mothballed’ brick plants combined with a marked shortage of bricklayers. Energy efficiency legislation and initiatives (e.g. CERT) and requirements of Part L of the Building Regulations have driven up demand for insulated external walls, in particular render coated external wall insulation systems and composite panels.

The social housing refurbishment sector originally seemed as if it would be a key area of demand for insulated render systems, due to the introduction of the ‘Green Deal’, and, more relevantly, the Energy Companies Obligation (ECO) in 2013. However, should the government’s proposed changes for more moderate targets for solid wall insulation go through, then projected growth levels will be negatively affected. Other potential market drivers for cladding products are likely to arise from the waste management, recycling and renewable energy sectors.

By value, the largest sector is the curtain walling and structural glazing sector, while the share taken by facing bricks is considerably lower by value. Other higher value sub-sectors include the high specification zinc, copper and aluminium metal cladding systems, natural stone cladding and pre-cast concrete cladding systems.

Over the 2008-2012 period, lower levels of construction activity in the commercial sector have fed through to reduced demand for up-market cladding, particularly unitised curtain wall and other architectural products. Since 2012, there has been renewed demand in Central London office projects and a growing trend among architects for copper and zinc rainscreen systems and roofing.

With so many different types of cladding products on the market, the supply base is highly fragmented, although there is a high degree of market concentration in some sub-sectors. In the clay bricks industry, the top three producers account for around 80% of the market. These companies are also leading suppliers of other types of ‘niche’ clay cladding material such as brick slips and terracotta rainscreens. However, imports account for the majority of terracotta rainscreen systems installed in the UK.

The metal cladding panel market is a little more fragmented while the profiled panel market is even less concentrated. Systems companies and their approved fabricators / installers mostly account for the lower-middle sectors of the curtain wall market. The remainder of the wall cladding market is highly fragmented in terms of material types and in each sub-sector there are relatively few suppliers.

“Over the short to medium term, reasonable volume growth of between 5-8% per annum is expected, largely driven by private housebuilding activity and the government’s Help to Buy and other affordable homes programmes.” said Keith Taylor, Director of AMA Research. “Other end-use sectors likely to show increased demand are commercial offices, waste management and leisure, reflecting expected recovery in the commercial new build sector as well as commitments to further expansion in sectors such as waste.”

The overall value of the wall cladding market is difficult to estimate due to the fact that some elements are system based and the product and material is integral with the installation. Keeping this in mind, the product value at trade purchase price was estimated at around £1.8 billion in 2013.

The ‘Wall Cladding Market Report - 2014-2018 Analysis’ report is published by AMA Research, a leading provider of market research and consultancy services within the construction and home improvement markets. The report is available now and can be ordered online at www.amaresearch.co.uk or by calling 01242 235724.

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