UK market for wall cladding has increased by around 18%
in total between 2012 and 2015/16, driven by strong growth in new build and
major refurbishment activity in key sectors, such as housebuilding, offices,
schools & higher education, hotels & leisure, transport buildings and
online retail warehousing. The range of cladding types is broad and the supply
chain diversified and fragmented, and demand for the various cladding types
tends to vary depending on the relative buoyancy of their main end-use markets.
Construction output in 2013 and 2014 was helped by the
relatively good summer weather, with private housebuilding, social housing
refurbishment, waste management infrastructure and the Central London office
development sub-sector all showing solid growth. With improving levels of
housebuilding output, driven largely by the Help to Buy scheme and a shift back
from flats to houses, demand for facing bricks outpaced supply, with imports needed
to make up the shortfalls. However, by 2015, UK brick deliveries improved, so
driving up completions.
Energy efficiency legislation and initiatives (e.g. ECO)
and requirements of Part L of the Building Regulations have driven up demand
for cladding products and systems with higher energy efficiency properties e.g.
render coated external wall insulation systems and composite panels. The wetter
than average weather in the summer of 2015 did, however, appear to hold back
the overall rate of growth in demand for bricks and certain other cladding
products. Overall, the market has not grown significantly in volume terms since
2014.
Clay facing bricks constitute the largest product group,
with demand recently having been driven up by increasing housing output. Other
main types of cladding used on housing included cast stone,
timber/weatherboarding and render on blockwork and EWI. Clay facing bricks are
also used on non-domestic applications, but demand in key areas, in particular
out-of-town retail new build, has constrained growth rates here.
In the commercial sector, the return to growth in office
development and high end apartment blocks in key city locations has largely
underpinned demand for curtain wall and rainscreen cladding systems. In the
industrial sector steel and aluminium profiled and composite wall panels typically
dominate demand for cladding, key areas of use being warehousing, out-of-town
retail ‘sheds’, waste management and utilities facilities and factories. The
impact of the recession on the retail and industrial sectors had reduced demand
for metal cladding, but demand has recovered driven by increasing demand for
online retail warehousing, data centres and energy-from-waste plants.
“Forecasts for lower
growth from 2017 are mainly driven by uncertainty following the ‘Brexit’
referendum”
said Keith Taylor, Director of AMA Research.
“Although modest annual growth levels are currently forecast to 2020, the
medium-term outlook will be dependent upon the path taken to exit the EU and
the type of trade and legislative deals formulated.”
Over the period ending March 2019, when Britain is
scheduled to leave the EU, at the very least, the uncertainty created by the
situation is likely to create more volatility in the construction market at
large. As a result, our view is that demand for cladding will decline modestly
during this time in volume terms. Our reasons for this view are due to lack of
confidence among property investors and business owners, a weakening of
Sterling against the Euro and the US dollar and endemic problems concerning
skills shortages in key areas. Other factors that are expected to contribute
towards slower growth include the cutting or ending of subsidies for certain
products and development programmes. For example, the government’s Energy
Company Obligation – to help with installing energy efficiency measures for the
less well off – is to expire next April.
The ‘Wall Cladding
Market Report – UK 2016-2020 Analysis’ report is published by AMA Research,
a leading provider of market research and consultancy services with over 25
years’ experience 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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