Leading European electrical wholesale groups continue to increase market share

The overall electrical wholesalers market in leading EU countries was estimated at €34bn in 2016, having seen a moderate increase on 2015, with 2017 growth expected at around 2%. This is according to AMA Research’s definition, which includes 12 EU countries, and excludes the UK market. The European electrical wholesale market has been affected by the downturn in construction in many countries over the last decade but has begun to show signs of improvement in 2016 and early 2017.

Germany represents the largest market for electrical wholesalers by value, followed by France and Italy, both some way behind. It should be said that there can be substantial variations in estimates of market size and mix by country due to there being a variation in definitions of what constitutes an electrical wholesaler, with some organisations providing much wider range of products than others – in some cases non-electrical ranges - which account for a significant proportion of turnover.

Prospects in the medium term will continue to be variable as some countries continue to impose tough public spending cuts to reduce their budget deficits, while in other countries the economic situation has improved over the past 1-2 years. Broadly, forecasts over the next few years in the electrical wholesaling market indicate modest recovery, reflecting a combination of increases in new housebuilding levels and a steady recovery in consumer spending feeding through into rising demand for electrical products in the medium term.

New market opportunities are also emerging with the electrical sector adopting variable levels of involvement in renewable energy and home automation, while IT and communications also continue to attract significant investment. Conversely, external threats to the sector have grown with a switch to offsite manufacturing in some countries and a growing focus on modularity in areas such as wiring and circuit breakers.

“In all of the markets reviewed, the ‘national’ players dominate the electrical wholesale market by value in 2016 – typically with shares of over 65% for the top 2-3 players” said Keith Taylor, Director of AMA Research. “It is becoming increasingly difficult for the smaller, independent companies to compete in the market for reasons including an inability to match depth and range of stock of the larger operations, the higher investment in IT and health & safety required, the burden of product regulations and other legislation, together with expectations to provide training and additional services”.

The continuing rationalisation has remained a key feature of this market, with further acquisitions consolidating the dominant positions of Rexel and Sonepar. Both organisations have continued to expand their operations in less mature markets in developing economies. Other groups with wholesaling operations beyond their national base are Solar and CEF, but neither group has the international scale of operations of the leading two suppliers. The trend towards further concentration of supply has also included buying groups, which are strong in the electrical wholesaler market. In addition, some vertical integration of the supply chain has taken place.

The outlook is for steady, if modest, growth to 2021, which will be underpinned by returning confidence in the European construction sector but characterised by severe price competition, particularly from imported products from the Far East.

The ‘Electrical Wholesalers Market Report - Europe 2017-2021 Analysis’ report is published by AMA Research, a leading provider of market research and consultancy services within the construction and home improvement markets. The full report is available now and can be ordered online at www.amaresearch.co.uk or by calling 01242 235724. In addition, also on offer are reviews of the 12 individual countries and a separate review of the UK electrical wholesale market is also available on our website.

‘Improve, don’t move’ trend boosts home extension applications

The number of planning applications decided and granted has increased during the last 2-3 years, following an ongoing period of decline in the years between 2010 and 2013. In 2015 and 2016, the total number of developments granted increased by 8% and 4% respectively. This growth was driven by the improving economic situation, which has boosted consumer confidence and the market for home improvements, and a requirement to increase living space within the home.

The overall home improvement market has grown in recent years. The trend towards ‘improve, don’t move’ has benefitted the home extensions market in particular, as extensions can provide additional living space or accommodate a growing family. This trend has also led to consumers spending more on upgrading their properties, particularly in terms of kitchen, bathrooms and glazing options, but also on flooring, underfloor heating and other elements.

Home extensions – single storey extensions in particular – represents one of the largest and fastest growing sectors of the home improvements market. Approximately 75,000 applications for single storey extensions were granted in 2016, a number which has risen over the last few years. Single storey extensions remain a popular form of home extension, partly because a large proportion no longer require planning permission under permitted development rights.

The number of double storey extensions has also grown, albeit at a slower rate than single storey extensions. In many major cities, especially London, loft and basement extensions are a growing feature of the market. Mainly owing to a lack of space, these extensions often represent a cost-effective method of adding living areas to properties without reducing outdoor space. Multi-level basement extensions have recently become popular, with London alone accounting for up to three-quarters of all basement applications. However, this has led to over-development concerns with some authorities imposing limits to the level of work which can be carried out.

Keith Taylor, Director of AMA Research, commented: “Despite the threats facing the UK housing market, the home extensions sector is expected to experience reasonably good growth over the next few years with home improvements seen as a cost-effective way of achieving greater living capacity and longer-term capital growth. Other drivers include more relaxed rules with regards to permitted development rights. Affordability issues are likely to remain the main barrier to growth, with banks and building societies now requiring additional information relating to borrowers' finances before any lending decision is made, and wage inflation remaining low.”

Although the outlook for the UK economy remains uncertain owing to the recent election results and the EU withdrawal, modest growth is forecast in terms of construction and RMI activity. Activity in the residential RMI sector is expected to continue in the short to medium term, and is forecast to reach £30bn by 2021. The share of residential RMI output taken by building extensions, currently at around 25%, is forecast to continue growing.

The ‘Home Extensions Market Report - GB 2017-2021 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.

UK home automation market grows by 20% in 2016

The UK home automation market has nearly tripled in size between 2012 and 2016, according to a report recently published by AMA Research. It is estimated that the market increased by 20% in 2016, in value terms. Although home automation systems have been available in the UK for many years, it is in recent years they have expanded from an upper market niche into a more mainstream market.

This crossover to the mainstream is a key development that is changing the structure of the market with a large variety of entry level and lower cost home automation products having been made available at very competitive prices in the past 2-3 years.

Technological advances driving the home automation market include the progress of wireless controls and “app” or application programme-driven control interfaces, which emphasize user-friendliness. Remote control of the system has meant that the consumer is increasingly able to control all aspects of the connected home from within the home, whilst travelling, at work or even abroad via smartphones, tablets and PCs. Take up of wireless routers/Internet has also benefited the home automation market, with increasing numbers of suppliers offering wireless systems based around the home Wi-Fi network.

The offering of modular systems which enable future expansion has also driven growth, and in addition, the development of systems aimed at self-installation has expanded significantly helping to substantially reduce costs and make systems more affordable to a wider market.

“Greater interest and purchase of home automation systems has been encouraged by the wider availability of smartphone app controlled devices that are now more affordable and enable greater monitoring and control of a range of devices and systems in the home” said Hayley Thornley, Market Research Manager at AMA Research. “Many suppliers of home automation systems have embraced these developments and introduced control panels with icons that resemble smartphone controls, which are deemed to be more user-friendly than some of those previously used.”

The rapid increase in availability of home automation products has led to many independent standalone systems and devices without inter connectivity. System manufacturers are working to find a standard protocol that would enable many more devices to operate across services even where devices are purchased from different manufacturers, with some opening up their operating platforms to third-party developers to encourage the development of suitable devices to fit their systems.

The market is currently considered to be in the initial growth stage, with medium-term prospects for home automation remaining positive with over 50% growth currently forecast to 2021. Growth rates are, however, expected to gradually reduce in the medium term.

The growth of intelligent heating controls is expected to continue into the medium-term, with rapid innovation likely to be the key driver, and micro-generation of energy is also likely to provide a key driver for growth in future years. More intelligent IoT devices that can make smart choices and an increase in voice control devices is also likely to generate interest.

However, ultimately the rate of uptake will be influenced by a number of factors including rates of disposable income, the extent that home automation systems are adopted by mainstream housebuilding organisations, modularity or inter connectivity of devices, ease of installation and the perception by householders of how much value the system will adds to the property when set against other choices.

The ‘Home Automation Market Report – UK 2017-2021 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.

Small & Medium Renewable Energy - UK 2016-2020 - Key Facts

• Solar photovoltaics (PV) accounts for over 80% of all renewable electricity under the FIT scheme.
• By installed value, heat pumps account for some 7% of the market in 2016.
• Only 9% of the small-medium onshore windpower sector is residential in 2016.
• Solar thermal installations continue to fall, dropping to c 25,000 m2 in 2015.
• Small biomass boilers (<200kw) accounted for 69% of all biomass boiler installations in 2015.

These facts have been extracted from AMA Research's report 'Small & Medium Renewable Energy Market Report - UK 2016-2020 Analysis', available from www.amaresearch.co.uk or by calling 01242 235724.

Internet sales of plumbing products in the UK increased by 28% in 2015

The internet is the fastest growing distribution channel of the overall UK plumbing and heating products market and has experienced strong growth levels in the last 5 years. In 2015, the internet distribution market for plumbing products increased by 28% on the previous year. Shower controls and bathroom taps represent the largest sector of the internet plumbing market, followed by bathroom furniture and accessories, baths & sanitaryware, heating products such as boilers and standard radiators, shower enclosures and screens & trays.

It is estimated that in 2015 around 80% of plumbing products transacted on the internet are through specialist online plumbing retailers, of which a majority are pure-play retailers that do not have a showroom and only trade online. There are now some very large online specialist distributors that account for significant shares. Non-specialists account for around 20% of the total internet plumbing market and include merchant/trade outlets, DIY multiples, marketplace websites such as Amazon and eBay, and other retail outlets. Non-specialists also include plumbing manufacturers that may make specific products available for consumers to buy online.

Key drivers include the increasing availability of internet access, increasing usage of mobile internet using smartphones and tablets, and the rise of online review sites and blogs, which is now considered the most trusted form of advertising among potential buyers. The UK is Europe’s leading e-retail economy and now has around 39 million adult users accessing the internet every day, and trade sources report that around one third of UK shoppers also now regularly check their mobiles devices for better prices whilst in a physical store. Other trends include an increase in ‘Click and Collect’ purchases, and an expectance of shorter delivery times with next day delivery often required, free shipping and free returns.

Own-label products sold on the internet are performing particularly well, and some leading specialist online plumbing retailers are exploiting this opportunity by exclusively supplying own-label lines. Other online retailers, however, have expanded the number of plumbing brands they offer in order to capture a wider audience. It is likely that the number of specialist internet plumbing suppliers will continue to consolidate as this market sector matures. An increasing number of pure-play online retailers may also offer a showroom facility in order to grow and compete with store-based specialist plumbing suppliers and non-specialists.

“While the level of internet access in households is likely to reach saturation point in the near future, online purchasing of heating and plumbing products is far from mature” said Keith Taylor, Director of AMA Research. “Consumers are already using the internet for purchases of individual items, in particular replacement products, but future growth is largely dependent on the uptake of online purchasing among plumbers and installers. This is likely to grow significantly as a result of the increasing use of mobile internet, improving quality of suppliers’ mobile websites or apps as well as the ability of installers’ existing supply chain to adapt to this behaviour and offer services such as Click and Collect.”

Even though the internet plumbing market has continued to increase as a result of an improving UK economy and housebuilding levels and the added convenience and low prices offered by online purchasing, forecasts indicate that the pace of growth will gradually start to slow down as this market matures. The timing of this change of pace is difficult to estimate, with ongoing technological developments influencing buyer behaviour, however, it is estimated that the UK internet plumbing and heating market will increase by over 52% between 2016 and 2020.

The ‘Internet Plumbing and Heating Market Report – UK 2016-2020 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.

UK data centre construction market worth around £1bn in 2015

The market for data centre construction is estimated to be valued at just over £1bn in 2015, following 3 years of market consolidation. The performance has been variable in recent years, with construction demand affected by an oversupply of data centre resources in the co-location sector, followed by a period where the surplus capacity has been used to soak up modestly increasing demand. The effects of the government’s data centre consolidation programme are also contributing to the variable market performance.

Output in 2015 was generally relatively poor as the economy faltered somewhat and the government started the process of streamlining their estate, while the wholesale and co-location sector came under pressure from having too much available space. The private data centre construction market has also been relatively subdued in recent years, though since 2014 there have been greater levels of confidence in investing in business infrastructure. The increase in political stability and the improvement in the economy coupled with more projects getting underway in the latter half of 2015, have led to a more positive outlook for 2016.

The government owns a large amount of data centres and as such has a significant influence on the replacement and maintenance sector of the market. While commercial developers, such as co-location providers, account for a significant share of new builds due to their large scale and the high specifications, the majority of the existing data centre estate belongs to private businesses.

The largest geographical UK data centre cluster remains in the London and M25 area, though there is growth outside of this region, with large campus style data centres established in areas such as Wiltshire, Leicestershire, South Wales and Cambridgeshire. There is a trend of migration from London to regional areas as the data centre pricing varies by geographical data centre cluster, with London & M25 area average pricing significantly higher than the UK average.

Energy efficiency is a key driver of market performance. The effects of improving energy efficiency in data centres can be seen immediately, bringing the additional benefit of substantial savings on operational costs, and this has driven demand for modular solutions, from rack-based solutions to complete data centre pods and containerised solutions. Ever increasing levels of online activity, and changes in the way online services are delivered with a growing interest in cloud computing technology, are also driving demand. However, increasing ‘cloud’ take-up might shift the emphasis on data centre construction to the commercial and co-location sector away from the privately owned sector.

Data centre construction is emerging as a significant sector in its own right, and one key trend seen in recent years is that of integrated service offerings. While most large M&E contracting businesses are key players in this market, companies involved in data centre construction range from major building contracting groups and commercial developers, to data centre specialists and operators, modular building manufacturers and IT equipment suppliers. It is likely that further consolidation will take place among operators, specialists and construction/ engineering firms in the near future, as the market remains extremely fragmented and characterised by a large number of new entrants and small market shares, even among the leading players.

“Recently, there have been growing concerns about data sovereignty and the ‘safe harbour’ ruling, something which is likely to lead to greater levels of storage of data in the UK and Europe by large scale US corporations.” said Keith Taylor, Director of AMA Research. “At the end of 2015 a number of major projects have been announced which will be implemented across 2016 and 2017, in particular the large scale data centres for Amazon Web Services and Microsoft, and these together with other major programmes should provide some impetus to the market in the next year or two.”

Indications are that construction output within the data centre sub-sector will rise from 2016 onwards driven by a general improvement in the economy and the improved performance of certain end use sectors as well as the underlying factors driving greater IT and internet usage. That said, the high levels of vacant space and the trend towards data centre consolidation, particularly in the public sector, are likely to lead to relatively modest overall growth. Consolidation is likely to remain a continuing theme, something which will lead to larger contract sizes and may affect the market for replacement and maintenance negatively in the longer term. By 2020, the data centre construction market is forecast to have increased by 9% overall, though there is likely to be volatility within the forecast period.

The ‘Data Centre Construction 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.

Many challenges ahead for the UK Small and Medium Renewable Energy market

The market for ‘small and medium’ renewable energy products has fluctuated since 2011, when market values peaked, but has remained at well above £2bn per annum in 2012-15, according to a new report recently published by AMA Research. The main driver has been solar photovoltaics (PV), which accounts for over 80% of all renewable electricity and 98% of all installations under the FIT. While private households were the main area of application, this market has declined since 2012 due to a reduction in subsidies, while demand from the commercial sector has grown.

The new edition of this report has been extended from covering just the renewables microgeneration sector and renewable heat generation, to covering small and medium size renewable electricity and heat generation. The upper limits are in accordance with the parameters of the Feed In Tariff (FIT) and Renewable Heat Incentive (RHI) subsidy programmes, which are for installed capacities of 5 MW and 200 kWth respectively.

While the FIT incentive has been almost the sole demand driver for nearly all sub 5 MW solar PV schemes, other small-medium size renewable energy projects have been developed, either under the Renewables Obligation (RO) or without government support. Although the RO was closed off to new sub 5 MW developments after the launch of FIT, it still continued to support new developments in Northern Ireland, where the FIT is not available. While private households have been the main area of application since 2012, when the first degression led to a large reduction in tariff payments for domestic schemes, this market has declined while demand from the commercial sector has grown.

All other small-medium size renewable energy markets, such as windpower, hydropower, anaerobic digestion-with-biogas and wood-fuelled boilers, have also grown since the introduction of FIT in 2010, albeit at much more modest rates than the solar PV market. The RHI subsidy programme has also provided a significant boost to the number of renewable heat technologies, although wood-fuelled boilers are by far the most widely installed type in the non-domestic sector. In the domestic sector, the main area of demand has been for heat pumps and, to a lesser extent, wood-fuelled boilers. Other types of technology, in particular solar power, have suffered from declining demand in recent years.

“The forecasts through to 2020 illustrate the expectation that the market is likely to face significant challenges, in the form of declining Government support as well as lower gas and electricity prices, and this is likely to mean that any growth in the market will be at an individual product level, rather than an overall market level” said Keith Taylor, Director of AMA Research. “The recent round of degression to tariffs under the FIT scheme is likely to severely impede growth in the renewable electricity sector - while rates have been reduced for all technologies they have been particularly severe for solar PV and windpower.“

While the prospects for solar PV and windpower do not look promising under current support schemes, other sectors are expected to fare better, in particular non-water industry anaerobic digestion (AD). One of the least mature renewable technologies, the impact of degression has been relatively small because new capacity coming on-stream each quarter has not been sufficiently high to trigger large drops in tariff rates. One key factor expected to drive the market is the recent availability of RHI tariffs for biomethane-to-grid injection. With negligible capacity prior to 2014, it increased by over 400% in 2014 and is forecast to grow fourfold in 2016.

Unlike solar PV and windpower FIT tariffs, the RHI programme appears to be relatively safe for now, with £1.5bn annual support pledged by the Government in the Autumn 2015 review. How this is apportioned across the eligible technologies is as yet unknown but, as well as AD biomethane, heat pumps and commercial wood-fuelled boilers are likely to benefit from increased demand. In spite of this, the whole renewables industry is now faced with a raft of problems that could curtail growth, including the proposed implementation of EU requirements to raise VAT levels to 20%, the removal of the Climate Change Levy Exemption Certificates (LECs) for all renewable power generation, whether new or existing schemes, the withdrawal of the Allowable Solutions scheme and the abandonment of the Zero Carbon Homes targets, and the removal of tax breaks for community and small business energy projects. However, constant policy changes make it a difficult sector to forecast and prospects will continue to be volatile as new initiatives are introduced.

The ‘Small and Medium Renewable Energy Market Report – UK 2016-2020 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.

6% growth forecast for the UK building insulation market in 2015

UK market for building insulation has recovered somewhat in 2014 as housebuilding levels have continued to rise and initiatives such as the Green Deal and ECO have gained some momentum. This followed a significant downturn in 2013, which was due to a fall in government-subsidised retrofitted installation activity, and saw the total market value fall by around 7%.

Although there has been growth in demand for insulation products from increasing levels of new housebuilding and in non-domestic building, the Green Deal and Energy Company Obligation (ECO) have so far only generated a fraction of the levels of domestic installation activity of previous government initiatives such as CERT and CESP, which ended in 2012. Other key market influences include changes to Building Regulations and energy prices changes. Although crude oil and gas prices have fallen recently, energy prices are forecast to rise over the longer-term, which is likely to result in higher end-product prices for insulation products.

PUR / PIR products now have the largest market share of insulation products, accounting for ~40% by value in 2014. The market value of mineral wool products has fallen due to the fall in demand for such products under the Green Deal and ECO, but they still account for a third of the total market in the UK. With retrofit the most important market, the key areas of demand by application have been cavity walls and lofts. The share held by solid walls was just 10%, although this is around 10 times higher than under CERT/CESP.

By end-use sector, despite the dramatic fall in demand under the Green Deal and ECO, the most important market remains domestic retrofit, which accounts for ~40% by area installed and the key areas of demand by application have been cavity walls and lofts. The non-domestic market is also significant and mainly consists of insulation for flat roofs and site-built metal cladding and roofing systems. The share for new housebuilding is higher than in recent years due to steadily rising numbers of housing completions.

The key supply route for insulation products are the specialist (interiors) distributors. Builders’ merchants account for approximately 15% of the market, the remainder being split between direct sales to installers, direct sales to external wall insulation systems companies, converters and DIY stores. The installation market is polarised between a small number of national companies and many regional and local independent firms. The leading contractors typically provide other energy efficiency services as well as insulation work.

“Although the non-residential and new house building sectors are forecast to continue to show reasonable growth over the next five years, we expect retrofit installations in the residential sector to lag behind in terms of growth” said Keith Taylor, Director of AMA Research. “Growth in this sector has been driven by Government funded initiatives in recent years to subsidise the retrofitting of insulation, but due to the end of Green Deal funding and also the uncertainty over the longer-term future of the ECO, this suggests that growth in this sector may be more modest.”

The market for insulation products is forecast to grow by 6% in 2015, after which growth will gradually slow down to reach a level of around 3% per annum in 2019.

The ‘Building Insulation Products Market Report – UK 2015-2019 Analysis’ 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.

UK Ventilation and Air Conditioning market returns to growth

The UK ventilation and air conditioning market experienced growth of 4% in 2014, and by the end of 2019 market value is forecast to have reached a value in excess of £1.2bn. Though growth rates expected between 2015 and 2019 can be considered moderate, this marks a turnaround for a market that has seen static conditions at best since the beginning of the economic downturn. 

The largest product sector is air conditioning systems, which account for over half of the market by value, followed by ventilation products and VAC accessories. Positive influences on the ventilation and air conditioning market in recent years have included increasing health, safety and energy efficiency legislation, revised Building Regulations and environmental legislation, all of which have stimulated product innovation and development.

The future performance of the UK ventilation and air conditioning market is likely to be influenced by overall trends in housebuilding and non-domestic construction, RMI activity, fuel prices, energy efficiency legislation, renewable technologies, levels of personal disposable income, plus climatic factors and air temperatures. More specifically, initiatives include The ErP Directive for ventilation fans, the European Ozone Depleting Substances (ODS) Regulation, the CRC Energy Efficiency Scheme which targets emissions from large public and private sector organisations, EU Fire Legislation and general concerns relating to fire and smoke precautions and The Green Deal.

Enhanced levels of market penetration are also likely to arise from product innovation and technological developments that will lead to an overall increase in system efficiencies. For example, variable speed drives, multiple scroll compressors, EC motors, heat recovery and demand control ventilation.

“In general, the UK ventilation and air conditioning market exhibits the characteristics of an increasingly mature market with manufacturers developing brand and product differentiation and niche specific sectors in order to secure competitive advantage” said Keith Taylor, Director of AMA Research. “The relatively wide range of end use sectors and specialist applications for UK ventilation and air conditioning products represents a supporting factor to underpin the long term market development.” 

The current forecast is based on steady growth in the economy and on business and consumer confidence levels. By 2019 it is estimated that the UK ventilation and air conditioning market will have increased by around 10% when compared to the estimated market size in 2015.

The ‘Ventilation and Air Conditioning Market Report – UK 2015-2019 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.

Water Saving Products - 5 Key Facts

Did you know....

1) The UK water saving plumbing products market is estimated at £164 million at Manufacturers Selling Prices (MSP) in 2013.

2) The water efficient bathroom product sector is around 85% of the total in 2013.

3) Nearly two thirds of residential water is used in the bathroom either for showering, hand washing /bathing or flushing the toilet.

4) Direct sales via a specialist has 40% share of the water recycling systems market.

5) It is estimated that the UK market for rainwater harvesting systems has grown by over 50% in the last 4 years.

These facts have been extracted from AMA Research's report 'Water Saving Plumbing Products Market Report - UK 2014-2018 Analysis', available from www.amaresearch.co.uk or by calling 01242 235724.

UK water heating market to grow by 6% between 2015 and 2019

UK water heating market saw marginal growth in 2014, with an increase of a further 2% by value expected during 2015. Between 2010 and 2012, the UK water heating market was comparatively volatile in line with the uncertain economic situation at this time. However, since 2013 the market for water heating products has modestly increased, with demand picking up as the economy improves.

The core product sectors of the UK water heating market are; hot water storage systems, which account for around 70% of the market, instantaneous water heaters and boiling water heaters and taps.

The number of homes with hot water storage has declined significantly in recent years, with the increasing reliance on combination boilers for hot water provision. The vast majority of new homes now have a mains pressurised system installed as standard, predominantly in the form of an unvented storage cylinder in larger properties and a combination boiler in smaller to medium properties and apartments.

The market for instantaneous water heaters has seen some moderate growth more recently, particularly in the commercial sector. However, demand for multi-point instantaneous water heaters has been negatively impacted by the development of the market for combination boilers. This sector is dominated by replacement demand, which is a large, but declining market. The market for boiling water heaters for hot drinks has seen good growth over the last 5 years, particularly in commercial applications such as offices, staff canteens and factories.

Positive influences on this market include the growing concerns about energy efficiency and the environment. The government has introduced a significant amount of environmental legislation in recent years placing a greater emphasis on carbon emissions and fuel efficiency. In general terms, water heating products are being increasingly designed to deliver improved thermal performance, in order to achieve lower running costs. This trend has been influenced by the further revisions to Part L in 2013. These changes have contributed to a reduction in the overall space and water heating load in the new build sector, with more stringent energy efficiency and insulation requirements.

The majority of water heating products are distributed via the trade channels such as builders/plumbers merchants, electrical wholesalers and specialist heating distributors. In addition, there are an increasing number of products sold via the internet either through online retailers or, in the case of boiling water taps, direct via manufacturers’ websites.

“The future performance of the UK water heating market is likely to be influenced by overall trends in house building and construction, RMI activity, fuel prices, energy efficiency legislation, renewable technologies, levels of personal disposable income, patterns of hot water consumption and niche segments such as the self-build market” said Keith Taylor, Director of AMA Research. “The ErP Directive and other initiatives such as the ECO scheme and the Green Deal will also influence growth to some extent, and the widespread roll-out of smart meters over the next few years will impact on the demand for energy efficient water heating solutions.” 

Current forecasts are based on steady recovery in the economy and on consumer and business confidence levels. By 2019 it is estimated that the UK water heating market will have increased by 6-7% when compared to the estimated market size in 2015.

The ‘Water Heating Market Report – UK 2015-2019 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.

Steady growth in the UK Space Heating market

The UK space heating market forms a key part of a total UK heating market worth around £2 billion. Since 2013 the market for domestic and non-domestic space heating products has steadily increased, with demand picking up as the economy improves. The space heating market is estimated to have grown by around 4% in 2014, with a similar growth rate predicted for 2015.

Positive influences on this market include the growing concerns about energy efficiency and the environment, and both domestic and non-domestic space heating products are increasingly designed to deliver improved thermal performance, with a view to achieving lower running costs. Further revisions to Part L 2013 have contributed to a reduction in the overall heating load in the new build sector, with increased energy efficiency requirements. This has impacted on the type of domestic space heating products that are specified, with more efficient solutions in greater demand.

This increased emphasis on reducing energy consumption and carbon emissions is also having a significant impact on the type of commercial space heating systems specified. Also, considerable replacement opportunities remain in existing non-domestic buildings; there is still a large number of inefficient heating systems in use. The government has introduced a significant amount of environmental legislation in recent years placing a greater emphasis on carbon emissions and fuel efficiency.

Winter temperatures also have a significant influence on demand for domestic space heating products, particularly on portable products. Since 2011, winter temperatures have remained relatively mild, impacting on demand to some extent. However demand for wood burning stoves has seen a significant positive growth and they have become a desirable addition to the home.

Electric and gas fuel effect fires continue to demonstrate underlying growth, motivated by ease of control and convenience. Flueless designs are particularly popular as they offer an affordable way to update a room. The steady growth of communal or district heating systems is having some positive impact on demand for commercial boilers. This is where heat is generated in one central location and distributed throughout a number of multi-residential buildings, typically flats and apartments.

The future performance of the UK space heating market is likely to be influenced by overall trends in house building and construction, RMI activity, fuel prices, energy efficiency legislation, renewable technologies, levels of personal disposable income, and niche market drivers such as the self-build and conservatory markets.

The Energy related Products (ErP) Directive for commercial hot water boilers will come into effect from 26th September 2015, and other initiatives such as the ECO scheme and the Green Deal will also influence growth to some extent. The Carbon Reduction Commitment (CRC) energy efficiency scheme, launched in 2013 will provide some positive influence on non-domestic heating installations. As part of the transition to a low carbon economy, there is a government initiative to install smart meters in all homes and businesses by 2020. The widespread roll-out is planned to start in 2015 and will impact on the demand for energy efficient space heating solutions.

“Given that fossil fuels are diminishing and government targets for reduced CO2 emissions have to be met, the impact of renewable technologies on the UK space heating industry in the medium to longer term is likely to be significant” said Keith Taylor, Director of AMA Research. “It is anticipated that the trend towards low carbon buildings will result in the adoption of a wider range of technologies in order to deliver efficient space heating. These are likely to use a combination of both fossil fuel and renewable heat sources.”           

The current forecast is based on steady recovery for the wider economy and for consumer and business confidence levels. By 2019 it is estimated that the UK space heating market will be worth some £630m, having grown by 12% compared to the estimated market size in 2015.

The ‘Space Heating Market Report – UK 2015-2019 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.

Good growth forecast for plumbing contractors market in 2015

The plumbing contractors market was estimated to be valued at around £14.7bn in 2014, having seen good levels of growth over the last two years.

The plumbing contracting sector weathered the economic downturn fairly well compared with other construction sectors, due to the fact that a large share of work is made up of repair and maintenance, which is generally more resilient than work within the newbuild sector. In addition, plumbing installations cover a number of non-domestic sectors, in addition to housing, and some of these, in particular the public sectors, continued to perform relatively well into the recession due to continued government investment to support the construction industry.

The market experienced a slight improvement in 2010 and again in 2011, however, value was inflated by widespread material cost increases within some plumbing product sectors, particularly those related to copper. In addition, spending cuts within the public sector had started to come into effect and the value growth could not be sustained, leading to a decline in the plumbing contracting market during 2012. The situation was more positive in 2013 and while the economic situation remained relatively fragile, there were positive signs during 2014 - business confidence improved and construction activity increased sharply, particularly in the housing sector.

The key occupational roles across the plumbing contracting sector include general plumbing and bathroom installations (mostly domestic), gas installation and maintenance, refrigeration and air conditioning, and heating and ventilation. Employment in the plumbing and heating sector is expected to increase across England, Scotland and Wales. There are currently skills shortages for fully qualified plumbers, which should increase labour costs and support value growth across the contracting sector in the short to medium term.

Future prospects for the plumbing contracting market are relatively bright, providing the construction market in general continues to improve. Indications for 2015 are positive and it is hoped the market will achieve value growth of around 6% during the year. While the pace of growth is likely to have slowed by 2016/2017, it is expected that the plumbing contracting market will be worth £17.1bn by the end of the forecast period.

“Opportunities for growth are likely to be found in the new housing sector, which is currently being driven by rising prices, increased mortgage lending, as well as a growing uptake of the government’s ‘Help to Buy’ programme” said Keith Taylor, Director of AMA Research. “In the existing housing sector, the changes to the stamp duty levels along with growing consumer confidence and spending, should support increased RMI expenditure.”

It is likely that as the economy improves and consumer confidence grows, an increasing number of consumers will begin to focus on higher value, big ticket projects such as kitchens and bathrooms. This is perhaps already the case in London and the south east and other areas which have experienced high property value growth. Other potential areas of growth include the installation of additional bathrooms, e.g. en-suite and cloakrooms into properties, along with kitchen extensions and utility rooms.

The ‘Plumbing Contractors Market Report – UK 2015-2019 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.

Slow but steady growth forecast in the UK Electrical Accessories Market

The electrical accessories market is estimated to be valued at just under £1.5bn in 2014, according to a new report from AMA Research. The market has seen growth of 16% since it bottomed out in 2009 and is now only 7% below its peak in 2007.

Although the difficult economic situation impacted negatively on market value between 2008 and 2010, a substantial rise in raw material costs inflating prices and offsetting low demand, coupled with modest improvements in the economy and growth in the construction market resulted in 10% market growth in 2011. While the market declined in 2012, signs that the economy was improving started to appear in 2013, housebuilding picked up and in addition, the electrical accessories market continued to be supported by major public sector projects, committed to prior to cuts, and as a result the market saw healthy growth in 2013.

The electrical accessories market, according to AMA’s definition, is dominated by low voltage cable systems with value share of over 50%, followed by circuit protection with around a quarter of the market and wiring accessories, which accounted for the remainder. As the electrical accessories market is mature, the product mix has remained fairly stable in recent years.

Raw material prices play an important role in determining market performance for electrical accessories, with the price of cable in particular being highly dependent on copper prices. These have fluctuated widely in recent years. Legislation on energy efficiency and carbon emissions as well as volatile fuel prices has seen interest in, and use of, integrated systems spreading into the wider domestic and light commercial markets to provide greater control for heating, lighting and all electrical systems.

Activity at supplier level during the recession has been focused on consolidation, rationalisation and cost cutting exercises, with many taking the opportunity to integrate earlier acquisitions, streamlining purchasing processes and even repositioning their businesses.

As the electrical accessories market is a mature and sizeable market, recovery will be relatively slow and steady. However, market value is expected to surpass its 2007 peak level by 2016. Pressure on pricing is likely to remain a key aspect of the market for some time. The current focus on solutions and systems within the electrical products market will continue to lead to demand for integrated systems in both the domestic and commercial sectors in the medium term, as well as an increased use of pre-fabricated wiring assemblies and wireless switches.

The demand for environmentally friendly products continues to be a major issue and this is a factor which is likely to be more influential in future years, as homeowners and business operators alike, use whatever means they can to improve the environmental credentials of their properties. This will lead to increased use of individual and central controls for lighting and other electrical products, perhaps creating demand in the electrical accessories sector.

Product development will continue to focus on environmental efficiency, wireless systems, integrated controls, reduced space and impact, quick installation such as prefabricated units and low installation application such as plug and play connections to reduce time on site and cut ‘down time’ during RMI situations.

“Current forecasts indicate annual growth rates of 5-6% from 2015 as the economy improves and house building activity increases” said Keith Taylor, Director of AMA Research. “It is expected that the market value will be around £1.8bn in 2018. However, this will depend on the speed of economic recovery and any fluctuations in raw material prices.”

The ‘Electrical Accessories Market Report - UK 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.

Energy efficiency drives growth in the UK Central Heating market

The UK domestic central heating market is substantial, with an estimated total value of around £1.1 billion at manufacturers’ prices in 2014. Over recent years this market has benefited from more stringent energy efficiency legislation and a drive towards sustainability.

Currently around 92% of UK homes have central heating installed, but while the market can now be considered mature, it still offers plenty of growth potential through upgrade and replacement purchases as well as product innovation to improve thermal performance, energy efficiency and control.

Between 2009 and 2012, the UK domestic central heating market was comparatively volatile, in line with the uncertain economic situation at this time. However, since January 2013 the market for domestic central heating products has seen a notable increase, with demand picking up as the economy improves. This growth can be partly attributed to the introduction of Government initiatives such as the ECO scheme and the Green Deal in 2013 as well as the further tightening of energy efficiency legislation in all product sectors of this market.

Estimated at £637 million at MSP in 2013, the boiler sector dominates the industry's sales. This is followed by radiators, heating controls and circulator pumps. The majority of these products are distributed via the trade channels such as builders/plumbers merchants and electrical wholesalers. However, replacement and retrofit products are often distributed via the DIY multiples and Online retailers. Other distributors include specialist heating retailers, hardware stores and catalogues. A number of products are also sold into OEMs.

In 2013 the market for domestic central heating products could be broken down into three key areas; refurbishment, which accounts for over 80% of sales, new build and first time installations. A major area of support for the market is expected to come from the domestic refurbishment sector. With new legislative measures, householders are now more aware of energy efficiency and the environmental impact of domestic central heating products.

The future performance of the UK domestic heating market is likely to be influenced by overall trends in house building, home improvement, fuel prices, energy efficiency legislation, renewable technologies, and technological developments also niche market drivers such as the self-build and conservatory markets. 

Increasing legislation represents a major influence in the long term development of this market. In addition to the demands of the European ErP directive, all radiators sold in the UK since July 2013 have to conform and have outputs verified to British Standard BS-EN442, something which is supporting the UK radiator industry as a whole, as it will eliminate low cost, imported products that do not meet this new mandatory standard. Higher levels of efficiency are also likely to be driven by the 2014 revisions to Part L of the Building Regulations.

Increasing awareness of energy usage and cost among consumers, partly as a result of the smart meters installation programme under which 53 million gas and electricity meters will be replaced with smart meters by 2020, is also a factor. This will also drive growth and product development within the heating controls sector, as demand for more sophisticated control products filters through into the consumer segment. The Governments’ renewable energy strategy with initiatives such as the domestic Renewable Heat Incentive (RHI) and Feed-in Tariffs (FIT) is likely to lead to further development of heating systems that are compatible with these technologies.

“The outlook for the UK domestic central heating market in Q4-2014 remains positive, with the continuing recovery in the UK economy and the related upturn in housebuilding and consumer confidence. However, with the election in mid-2015, uncertainties do exist regarding Government policy after this time” said Keith Taylor, Director of AMA Research. “By 2018 it is estimated that the UK domestic central heating market will be worth some £1.3 billion, representing an increase of around 18% when compared to the estimated market size in 2014.“ 

The ‘Domestic Central Heating 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.