Downturn in department store sector and increasing price competition likely to impact upper sectors of household textiles market.

Having experienced overall growth of 13% between 2013 and 2017, the UK household textiles market has been underpinned by returning consumer confidence and sustained demand from contract applications. The outlook for 2018 is for a slowing in annual growth rate to around 1-2% reflecting growing pressures on consumer spending and fierce price competition which is constraining overall value growth, despite rising import prices. Both mature and highly competitive with high household penetration levels, the market remains highly dependent upon replacement sales, in domestic and contract end-use sectors.

The household textiles market is now clearly positioned within the wider fashionable homewares market, with greater co-ordination of colours across items to create a particular style. This is exemplified by entry to the homewares market of clothing and fashion brands which also appeal to a younger demographic, creating additional sales opportunities. Additionally, ‘breathability’, ‘climate control’, ‘hypoallergenic’ and ‘anti-allergy’ have all become mainstream choices for filled products such as pillows and duvets.

The product mix for household textiles is dominated by bedlinen, followed by filled products, bathroom textiles and table linen/kitchen towelling. Given the maturity of the market, the share mix for the products has shown little change over the review period. Import penetration rates have also remained high with both India and Pakistan having grown share of key product sectors between 2015 and 2017. The contract sector also represents a steady stream of sales opportunities for all household textiles products, specifically hospitality and healthcare, with growth in the care homes sector. Market value has however been affected by competitive pricing.

The supply chain remains highly fragmented although there has been some consolidation over the past few years with larger companies gradually expanding their portfolio of products. In addition, the distribution pattern for household textiles is continuing to evolve with greater use of “omni-channel” approach by leading channels within the domestic sector as well as the increasing penetration of the “discounters” into the household textiles market. However, the upper sectors of the market are likely to be impacted by the extremely challenging conditions currently facing the department store sectors, with both sales volumes and values affected by the programme of store closures by leading organisations

Jane Tarver of AMA Research said:

“Future prospects for the household textiles market remain cautiously optimistic. The market is forecast to grow by around 6% 2018 and 2022, underpinned by sustained demand but with fierce price competition remaining a key characteristic. New UK trade deals are expected to be forged and operational by the end of the forecast period, thereby positively impacting upon UK consumer confidence, economic recovery and in turn the purchase of household textiles. Our forecast does however remain cautiously optimistic given the complex range of issues involved”

The degree of imports is expected to remain high across all sub-sectors and is therefore subject to fluctuations in exchange rates and raw material prices. However, UK suppliers may seek to maintain higher stock levels, in order to reduce lead times. Some may also seek to become more vertically integrated, taking processes in house, in order to combat rising import and overseas labour costs. The channels within the domestic distribution mix will also continue to evolve, based on the consumer perceptions of the convenience of ordering and delivery options. Coupled with the challenging conditions for key organisations in the upper market sectors, domestic distribution is likely to see a move to a more “omni-channel” approach with market volume increasing focused on the lower-mid market sectors.

The ‘Household Textiles Market Report – UK 2018-2022’ is available now and can be ordered online at www.amaresearch.co.uk or by calling 01242 235724.

Plumbers’ merchants market in the UK worth over £4.2bn

The plumbers’ merchants market was worth an estimated £4.2bn in 2017, representing growth of around 2% from 2016. The overall trend in recent years has been positive, and early indications for 2018 are for a continuation of the modest recovery experienced from Q3 2017 onwards, although there is still a degree of restructuring activity, as major players adapt to changing conditions and slowing growth in some key end use sectors.

Although the plumbers’ merchants market has experienced 5 years of growth since construction output recovered in 2013, there has been considerable variation in the rates of growth between the various end use sectors. Sectors that have been strong include housebuilding, while residential RMI activity, a significant sector for plumbing & heating materials, has been more modest. Some non-domestic sectors, such as infrastructure have remained positive, but in the education, commercial offices and healthcare sectors there was an overall fall in output in 2017.

Expectations are for more modest annual rates of growth to 2022, for both new construction and non-residential RMI. Skills shortages remain critical and are a major concern in the plumbing and heating sector, with the skills gap said to be one of the biggest threats facing the UK’s plumbing industry.

The plumbers merchants’ market, which comprises national, regional and local merchants, is dominated by four major merchant organisations, which together account for an estimated 65-70% share, in value terms. These firms operate via a number of subsidiaries, each supplying a range of plumbing and building products.

The main competitors for the merchants are the home improvement retail and specialist outlets, as well as manufacturers and suppliers that deal direct with the construction trade. There has been strong competition from alternative suppliers, particularly online companies, retail outlets and DIY multiples, which is being driven by a shift in customer buying behaviour, with online shopping via PCs and laptops - as well as via mobile phones and tablets - becoming increasingly popular among tradespeople.

Some of the major nationals have responded to recent challenges in the plumbing and heating sector by restructuring and streamlining their operations, which has led to a number of branch closures, as well as the opening of new, more efficient outlets, enhancement of online and/or multi-channel offerings and a stronger focus on digital technologies. This focus on e-commerce has helped to offset some of the shift to internet-only distributors.

Prospects for plumbers’ merchants are relatively positive, although current political uncertainties surrounding the UK’s exit from the EU and the consequences in terms of trade, business investment and the availability of skilled labour are already affecting growth, and will continue to do so in the short to medium term. While construction activity and output levels will continue to increase, the rate of growth is expected to fall and remain relatively modest to the end of the forecast period.

A stronger focus on energy efficiency and water saving will continue to drive growth in the plumbing and heating sector, providing new opportunities for merchants, and a growing number of merchants have already expanded their ranges to include renewable energy and sustainable heating products as well as water saving solutions. Ongoing changes to building regulations will also boost demand for higher specification products.

The 'Plumbers Merchants Market Report - UK 2018-2022' report is available now and can be ordered online at www.amaresearch.co.uk or by calling 01242 235724.

Modest growth forecasts for passive fire protection products in the UK

The UK market for passive fire protection products is estimated to be worth around £650m at manufacturers selling prices - excluding installation. The market has grown by around 2% in 2017, with forecasts for 2018 at a similar level. This follows good growth between 2013 and 2015, which represented a period of recovery for the overall construction industry, especially in the education, offices, retail and leisure sectors. The forecasts indicate a more subdued performance, with lower levels of construction activity anticipated as investor confidence has fallen, in the lead up to Brexit.

In terms of structure, the passive fire protection market is comprised of fire resistant doors, fittings and intumescent seals, cables, partitions and suspended ceilings, glass, structural protection and ductwork and damper systems. Fire resistant doors, fitting and seals account for the largest shares of the market, with around 60% of the total value.

Recent product innovations in the sector include; intumescent coatings with faster drying times, electronic fire door closers that are linked to fire alarm systems, and more flexible fire stopping pipe collars that allow a greater range of applications compared to conventional collars.

Key drivers, such as the regulatory aspects of the fire protection sector, are expected to remain unchanged in the short term, since the Hackitt Review into the Grenfell Tower disaster only covered high-rise buildings and provided no recommendations for immediate change in the technical aspects of Building Regulations. However, modifications are expected in the medium to longer term, and AMA Research also anticipates that there will be other implications for the wider industry, as manufacturers and specifiers alike seek to provide safer environments, possibly leading to positive growth by value.

Forecasts for the passive fire protection market in the medium-term are for modest growth in 2018 and 2019, with slightly higher growth levels by 2020. While the longer-term impact of Brexit remains unclear, investors are likely to remain cautious, and this has resulted in recent forecasts being less optimistic for overall construction sector output growth.

In the short term, activity in the non-domestic construction sector is likely to slow down, with more subdued growth of around 1-2% 2018-19. The overall market for passive fire protection products such as cable, glass, ceilings, partitions and doors, is dependent on the performance of key construction sectors, such as offices, industrial, entertainment, health and education.

In terms of output, new office construction is forecast to be less positive over 2018-22, following strong output growth of 70% between 2013 and 2017, something which may impact on demand in sectors such as structural fire protection, suspended ceilings and partitions.

However, the hotel and entertainment sector has shown good growth in recent years and is attracting substantial investment, especially in the budget sector. The university sector has also been positive in terms of new orders in 2018, with future output having the potential to be boosted by demand for new accommodation and facilities for additional students following the removal of the cap on student numbers.

Uncertainty regarding Brexit is expected to have less of an impact on residential construction, where the outlook remains modestly positive, driven in particular by the ongoing imbalance between demand and supply for new housing. Increasing numbers of new flats and apartments built will be the primary source of demand for passive protection in the residential sector.

Other factors influencing the market include the performance of Sterling against both the US dollar and the Euro. Since the 2016 Referendum, Sterling’s fall in value and continued relative weakness has meant that materials price inflation has become a key influence in the UK construction market. If this situation continues, it will prompt some value growth in the passive fire protection sector, since a wide range of materials and products is imported.

The 'Passive Fire Protection Market Report- UK 2018-2022' report is available now and can be ordered online at www.amaresearch.co.uk or by calling 01242 235724.

29% growth in the UK generator hire market since 2014

The market for diesel generator hire, which according to AMA’s definition excludes ancillary products, has performed well in recent years, having experienced growth of 29% from 2014. Over this period, the market has benefitted from increasing demand across most many application areas including construction, events, infrastructure and industrial. Other drivers include rising power demand in several sectors, such as events and industrial, as well as ‘critical’ applications requiring more secure back-up support.

The generator hire market is part of the larger construction equipment rental market that includes products typically hired out by plant and tool hire companies, such as earth moving, lifting, pumping, road-making, power and tools. It is estimated that the generator hire market accounts for only around 2% of the overall construction equipment rental market.

Opportunities in the generator hire market range from very large and infrequent situations to very small & recurring events. High value, one off sources of demand include major entertainment events and natural disasters; whilst other application areas include temporary construction usage and the need for power while a company’s own equipment is repaired.

Construction is a key end-use sector, and accounts for around one third of the market. Generators are required in a number of applications, such as for powering site cabins and welfare facilities, as well as powering pumps, lighting, crushing plant, tower cranes and tools & equipment etc. Generators are often one of the first pieces of equipment to arrive on site and the last to leave.

The industrial sector is the largest non-construction sector and the second largest overall, with demand driven by sectors such as manufacturing, refining & processing, recycling & waste, and data centres. Infrastructure and events are also important sectors for generator hire, each accounting for a significant share of the market. Further demand comes from the public sector as well other sectors including extractive, agriculture, commercial, retail and landscaping.

By volume, generators with a rating of 21-350kVA hold the largest share and account for close to half of the market, with generators up to 20 kVA having the second largest share at around a third of the market. The former are typically used in construction and events as well as in small offices, industrial units or hospital departments.

In terms of distribution, the market continues to be dominated by large, national multi-branch organisations that have expanded through a combination of organic growth and acquisition. In addition, a wider range of outlets including builders’ merchants, DIY multiples and garden stores now offer a hire service. Generator hire is also offered by both plant hire and tool hire companies, with the former focusing on larger generators with a higher generator rating and the latter focusing on smaller generators, typically up to around 20-25 kVA. Specialists can offer generators with a wider range of power ratings, up to around 2,000 kVA.

Prospects for the generator hire market into the medium-term remain relatively optimistic with the market forecast to experience annual growth rates of 4-5% following a slightly smaller increase of 2% in 2018. Going forward, construction sectors likely to be the main drivers of growth in the next 3-4 years are housing, infrastructure and entertainment & leisure.

The effect of the ‘Brexit’ negotiations on levels of confidence and investment remains the biggest risk factor to business confidence, which, if it falls further will have a direct effect on project starts. Additionally, any slowdown in non-construction activities, such as manufacturing or events, will negatively impact market value.

The ‘Generator Hire Market Report - UK 2018-2022’ report is available now and can be ordered online at www.amaresearch.co.uk or by calling 01242 235724.

Over 20% growth forecast for the UK kitchen & bathroom worktops market over the next five years

There has been good growth in the domestic kitchen and bathroom worktops market in recent years. Between 2014 and 2017, the UK overall worktops market is estimated to have grown by 13%. The worktops market has performed fractionally better than in the kitchen furniture and overall bathroom markets over the last few years, reflecting a shift to higher value worktops and a trend for larger worktop areas, such as islands and peninsulas with waterfall worktops.

Kitchen worktops account for 95% of the overall domestic worktop market. Value growth has been slightly higher in the worktops market than in the overall kitchen furniture market, reflecting a slow shift to more expensive materials such as granite and solid surface, following the relatively buoyant economic conditions over the last five years. This trend is continuing, and it is expected that value growth in the worktop market will be slightly ahead of the wider kitchen furniture market in the medium term.

The bathroom worktops market has followed a growth pattern similar to the bathroom furniture market, mainly due to a lower level of separate worktop replacements in this sector compared with the kitchen sector. Overall, the bathroom worktops market has grown, due to factors such as the increasing popularity of bathroom furniture, but as for kitchen worktops, the market has also benefited from the use of more expensive materials, including quartz, solid surface and granite surfaces, and features such as worktops with integrated basins.

Laminates continue to dominate the kitchen worktops market, making up just under half of all kitchen worktops installed by value, and almost 75% by volume. However, the share of laminates has declined notably in recent years, something which has been accelerated by the development of stone and engineered stone products for worktops in bespoke installations.

In the bathroom worktops sector the material mix is somewhat different. Laminates still dominate this market, making up over 60% of material used in terms of value, followed by solid surface and composite materials, whose shares has increased partly because of their flexibility in structure. The rest of the market is made up by stone and other materials, but so far, stone has not made the headway in this sector that it has in the kitchen worktops market.

The UK kitchen worktop supply chain is complex, with builders and plumbers’ merchants accounting for the largest distribution share by value. This channel has grown significantly in recent years followed by the retail kitchen specialists, while the DIY multiples sector has lost some market share. The sale of kitchens with installation included is likely to continue to increase, with many large suppliers now promoting this service.

Within the bathroom worktops market, builders and plumbers’ merchants are also the major distribution channel, followed by bathroom equipment specialists and DIY Multiples. One of the major differences between the kitchen and bathroom worktops sectors is that within the bathroom sector a larger proportion of worktops are incorporated into the furniture itself.

“The market for kitchen and bathroom worktops is expected to achieve reasonably good growth and is forecast to increase by 21% in value terms between 2017 and 2022, although the volume and price of imported materials is expected to account for a proportion of that increase” said Hayley Thornley, Market Research Manager at AMA Research.

“Kitchen worktops are expected to account for around 15% of the total kitchen furniture market by the end of the forecast period.”

The Domestic Kitchen and Bathroom Worktops Market Report - UK 2018-2022 report is available now and can be ordered online at www.amaresearch.co.uk or by calling 01242 235724.

Decline forecast for UK wall cladding market volumes

The UK market for wall cladding is estimated to have increased by around 40% between 2013 and 2017 in volume terms. In 2017/18, growth has been driven by strong growth in new build and major refurbishment output in the broader residential, commercial office, schools and universities, hotels & leisure facilities and warehousing sectors. However, in the retail and healthcare sectors and in certain segments of the leisure market, output levels have either declined or remained static. The forecast for 2018 is also for little to no growth.

Other than the state of the general economy and issues emanating from the ‘Brexit’ negotiations, it is the Grenfell Tower fire in 2017 that could have the greatest impact on the cladding market going forward. A possible ban on the use of combustible materials on buildings over 18 metres tall may well depress demand for cladding systems comprising rigid polymer insulation while benefitting those classified as A1 under Euroclass definitions e.g. stone and glass wool, concrete and fibre cement.

While investigations into other high-rise residential towers, with cladding similar to that installed on Grenfell Tower, have revealed that around 500 are similarly vulnerable to rapid fire spread, relatively few buildings have so far had the old ACM cladding replaced. With a number of local authorities and housing associations experiencing severe financial problems, that is unlikely to change in the near future.

Although modest annual economic 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. As a result, our view is that demand for cladding will decline. Over the period ending March 2019, at the very least, the uncertainty created by the Brexit situation is likely to create more volatility in the construction market at large, which in turn will lead to a lack of confidence among property investors and business owners.

Other issues include a weakening of Sterling against the Euro and the US dollar, endemic problems concerning skills shortages in key areas, and the challenges associated with the changes to fire regulations and changed specifications for cladding products.

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 (ECO) expires next April. A key driver stimulating demand for external wall insulation, it is likely that, as with previous government energy efficiency schemes, once ECO is complete there could be a large drop in demand.

The ‘Wall Cladding Market Report - UK 2018-2022’ report is available now and can be ordered online at www.amaresearch.co.uk or by calling 01242 235724.

4% value growth in the brassware and taps market despite intense pricing pressures

The brassware and taps market in the UK, which is worth in excess of £200m, is estimated to have grown by 4% in 2017. Following a period of slow growth, the market improved between 2014-2016, driven by more favourable conditions in the new housebuilding sector and demand from the private commercial sector. A more modest performance is anticipated in 2018 and 2019, with consumer and business confidence expected to decline, impacting on demand for brassware and taps. 

Basin brassware represents largest sector of the market with around 40% share, closely followed by kitchen taps with a similar share, while remaining 20% was accounted for by bath brassware.

The main distribution channel for brassware and taps continues to be builders and plumbers’ merchants with the home improvement multiples also holding a substantial share. Other retail channels include kitchen and bathroom specialists, grocery and furniture multiples, direct supply and department stores. Online retailers are also becoming more important as consumers increasingly use the internet to source the best deals.

Along with durability, key factors such as quality and design will remain important in the UK brassware and taps market. Aesthetics will continue to exert a notable influence on consumer choice particularly with respect to total kitchen or bathroom co-ordination, but the issue of design has also gained importance in commercial applications such as hospitals and schools, with a shift away from the traditional institutionalised appearance towards more domestic orientated styling.

With an ageing UK population, there will continue to be a significant demand for inclusive brassware and taps that combine style with ease of use. For example, lever-controlled products, thermostatic mechanisms, and those designed with digital/electronic controls. Water saving will also continue to be an important consideration and growth is likely in product areas including aerated spray taps, low water content taps, and brassware with an in-built eco button etc. 

Going forward, there are several key factors affecting the market prospects for the brassware and taps market in the UK. Housebuilding volumes have achieved good growth in recent years and this is expected to remain steady, albeit at a lower level compared to recent years, while RMI activity may be more constrained. However, refurbishment activity is expected to improve towards the end of the forecast period.

In the commercial sector, private work is typically a key driver of growth, but also relies upon business confidence, which is again expected to be stronger towards the end of the forecast period following the EU withdrawal. However, public sector spending cuts will continue to be an issue.

Exchange rates and the cost of imported goods have direct implications for brassware and taps produced or sourced from abroad. The current weakness of sterling makes imports into the UK more expensive, along with increasing transportation costs.

“Moderate to steady growth of 3-4% per annum is currently forecast from 2020 to 2022” said Hayley Thornley, Market Research Manager at AMA Research. “The brassware and taps market will continue to fragment and the number of own-label products, is likely to increase. Pricing pressures are likely to remain intense due to the high level of imported product, weak value of sterling and the growing number of competitive distribution channels such as the internet.”

The ‘Bathroom & Kitchen Brassware and Taps Market Report - UK 2018-2022’ report is available now and can be ordered online at www.amaresearch.co.uk or by calling 01242 235724.

UK street lighting market to see 17% value growth by 2022

The UK street lighting market has seen steady growth in recent years, driven by substantial LED replacement programmes run by local authorities over the past 5 years or so. By 2022, expenditure on street lighting is forecast to reach £336m, up by 17% compared with present levels. The share of the market taken by new projects is expected to increase, as more local authorities replace outdated lighting systems with LEDs.

Street lights account for an estimated 95% of public sector street lighting, with illuminated signs and bollards making up the remainder. Street lighting products include lamps, columns and ‘intelligent’ or ‘smart’ street lighting control systems.

With costs for non-energy efficient lighting increasing rapidly, more local authorities have been adopting LED systems offering 100,000 hours of light, compared with 15,000 for traditional bulbs. It has been suggested that local authorities could cut their energy expenditure by around £100m per annum by switching to LED street lights. As well as being more economical in energy terms, these new products also have longer lifespans and therefore will require a lower long term spend on replacements.

Although many councils have already switched to LED, there remains a significant proportion of old style, lower value lighting that is over 40 years old and in need of replacement and conversion. By 2014 only 10% of councils had switched to using low energy lighting and estimates suggest that in 2017 around 25% of lighting columns were in the process of being upgraded by local authorities.

It is estimated that maintenance accounts for a significant share of the market. Within the new projects/replacement equipment category much of future spending is likely to focus upon new areas of energy-efficiency, though in the long term, the value of maintenance is expected to decrease due to the reduced replacement lead times and the lowering of product prices as LED lighting penetration increases.

Once these new systems are in place, expenditure on new projects is expected to stabilise, leading to growth rates of around 1-2% per year towards the end of the forecast period. However, new housing developments across the country to meet ambitious Government house building targets has the potential to drive substantial growth in the market.

The ‘Street Furniture and Lighting Market Report - UK 2018-2022’ report is available now and can be ordered online at www.amaresearch.co.uk or by calling 01242 235724.

UK plant hire market forecast to grow by 11% between 2018 and 2022

The UK plant hire market was estimated to be worth £3bn in 2017, with growth of around 1% forecast for 2018. The plant hire market is extremely diverse, with equipment ranging from dehumidifiers to excavators, and demand for each type of equipment varies, reflecting a combination of factors including the level of new work and RMI in sectors such as highways and distribution & warehousing. Demand in sectors such as pumping and climate control is also impacted by the prevalent weather conditions.

The market experienced modest growth up to 2013 but increased significantly in 2014 due to improvements in both housing and non-residential building markets, as well as manufacturing and other non-construction end-use sectors. Since then, the plant hire market has remained positive, though growth has been at a lower level. Infrastructure remains the key end-use sector, although different parts of the infrastructure sector have performed differently in recent years. Plant hire is a highly competitive market and as such hire rates have been affected, remaining relatively static in recent years.

Earth-moving equipment and lifting equipment together are estimated to account for over two thirds of the plant hire market by value. The earth moving equipment hire market is traditionally cyclical, with demand influenced by levels of the non-residential construction, housebuilding, construction associated industries such as quarrying, and some non-construction activities including waste management. Earth moving equipment is one of the first sectors to benefit from construction project starts, and prospects for the sector are positive with growth forecast to 2022. Hire demand the lifting sector has also remained relatively strong.

“The performance of the plant hire market is highly dependent on the performance of the overall construction market” said Jane Tarver of AMA Research “Individual hire company’s experiences tend to vary in terms of product sectors and regional & geographical trends, with companies in the South East, for example, seeing higher demand from the housebuilding sector than those in the North of England, Scotland, etc.”

Prospects for this sector remain positive, although in common with many sectors of the hire market, there are likely to be regional variations in performance. Overall, the market is forecast to experience modest growth in 2018, benefiting from the HS2 project which is due to be started in the Autumn. From 2018 onwards, construction sub-sectors forecast to increase output and provide opportunities for growth include infrastructure, entertainment & leisure, industrial and health as well as housebuilding.

The ‘Plant HireMarket Report – UK 2018-2022’ report is available now and can be ordered online at www.amaresearch.co.uk or by calling 01242 235724.

4% growth in the UK market for street furniture

The total value of the street furniture market that is supplied to or influenced by local authorities and placed in public spaces or highways controlled by local authorities, is estimated to be worth around £328m in 2017, having grown by around 4% in the year. The local authority sector is thought to account for around 80% of the total market for street furniture. Forecasts indicate some growth over the 2018-2022 period, though growth rates are likely to be modest due to increasing pressures on budgets.

Street furniture can include a wide range of products, but the main product sectors can be considered to be; benches & seats, bins, bollards and barriers, planters, posts and rails, cycle stands and signage, including street name plates. Some street furniture products are more susceptible to the state of the economy than others - for example, damaged bollards and litter bins will need to be replaced, whereas plans for newbuild development and regeneration schemes using more expensive seating, planters and other optional etc. can be amended.

It is estimated that there are around 500-600 companies supplying street furniture, some of which manufacture branded products in the UK, while some manufacture for others without having a high profile with end-users. However, a substantial volume of products – usually at the lower end of the market - are imported into the UK from China and other countries.

Many companies specialise in only one or two products, or one type of material, such as stainless steel or timber. There is also a growing market for bespoke street furniture products, where the manufacturer is involved with the architect or specifier at an early stage of the project in order to produce a unique design for a particular location.

The future prospects for this market are for growth, though at a low level of around 1-2% per year between 2019 and 2022.

Keith Taylor, Director at AMA Research, said: “With grants from Central Government to Local Authorities falling, urban landscaping may be regarded as a lower priority for spending compared to social services and other costs and therefore likely to be under continual pressure for funding. In addition, maintenance budgets for street furniture may be limited because of high demand from other areas of highway maintenance expenditure, such as filling pot holes and converting street lighting to LEDs.”

However, demand for improving the urban environment is strong, with safety a key driver influencing decision-making, and increasing demand for certain types of street furniture, for example related to cycling.

Growth in the new housing market, in particular for larger-scale developments for affordable housing or private rental, should also benefit the overall street furniture market. There are schemes coming forward in many parts of the country to support the government’s aim to build more houses, including social housing. Despite the vote to leave the EU casting doubt on the future of the UK housing market, the overall outlook for residential construction remains positive, with modest growth over the next five years.

The ‘Street Furniture and Lighting Market Report - UK 2018-2022’ report is available now and can be ordered online at www.amaresearch.co.uk or by calling 01242 235724.

Hotel, leisure and entertainment construction output grew by 33% in 2017 to reach £9.4bn

Dominated by the private sector, the entertainment and leisure sector has experienced more positive construction output conditions than many other sectors over the past 5 years. Despite a dip in 2015, output growth in the sector has remained between 2013 and 2017, and overall indications are that output grew by around 33% in 2017 to reach £9.4bn. Expansion and investment has been largely confined to the budget hotels, health and fitness and more recently the cinema segments, with less buoyant activity in other sectors.

Going forward, there is a good pipeline of leisure sector work forecast, with a mix of theme park, resort, hotel and sports stadia in the pipeline, which should underpin construction growth over the forecast period. In addition, there are also a number of projects currently proposed or under discussion for the refurbishment and redevelopment of a number of sporting venues/stadia, with the larger projects likely to make a significant contribution to entertainment output into the medium-term.

The hotel sector will provide significant impetus for output growth with into the medium-term with the budget hotel sector a key driver of investment activity. The current erosion of the Pound Sterling against other currencies is making the UK an attractive holiday resort, and underpinning investment in hotels and restaurants, whilst the health and fitness sector should also continue to underpin output growth with the budget gym sector continuing to grow. 

However, there are sub-sectors within entertainment that are likely to do less well into the medium-term. The public house estate is facing issues of increased rents and falling turnover, and in addition, the betting and gaming sub-sector has also been affected by the move to online games and virtual casinos.

Overall, sector output is forecast to see good overall growth to 2022, albeit at lower growth rates of between 3% and 5% when output is forecast to be around £10.9bn; however, the diversity of the sector means that growth prospects vary considerably between sub-sectors, with recent growth in the budget and high-end hotel and budget gym and restaurant sectors helping to offset the decline in the pubs and clubs sectors.

Many new construction projects in the hotel and leisure sectors relate to re-fit or refurbishment as hoteliers and leisure facility owners focus investment in their portfolios through refits, re-branding and refurbishment programmes, rather than newbuild, and as such there remain opportunities for refurbishment and re-branding for the larger hotel and leisure operators.

Keith Taylor, Director at AMA Research said:

“There is no doubt that the hotel, leisure and entertainment construction sectors have performed very well in 2016 and 2017 compared to many other sectors. However, the 33% increase indicated by the construction output figures was partly caused by a revision of both historical and current ONS figures, and for 2018 we are likely to see more realistic figures for output growth”  

The ‘Construction in the Hotel, Entertainment and Leisure Sector Report - UK 2018-2022' report is available now and can be ordered online at www.amaresearch.co.uk or by calling 01242 235724.

Build to Rent forecast to become a key growth area in the UK housebuilding market

Including residential conversions, there were around 258,000 new dwellings delivered across the UK in 2016/17, up by 13% on the previous year. For 2017/18, it is estimated the rate of growth has been similar, with 280,000 new homes being added. Average selling prices have also been increasing year on year over the same period, contributing towards strong growth in total housebuilding contractors output, which nearly doubled between 2011/12 and 2017/18, though forecast growth to 2021 is more modest.

Volume growth has largely been driven by increasing activity levels in the private housing sector, underpinned by a combination of low interest rates, competitive mortgage deals and especially the Help to Buy equity loan scheme.

The key reason for this strong growth in value has been a marked shift away from 1-3 bedroom flats towards higher value 4+ bedroom detached and semi-detached homes, particularly across London, the South East and East of England. London has also been where demand for flats /apartments has also remained strongest. As with commercial properties, the luxury apartment sector has been a key area of investment for overseas investors, though following the EU Referendum result, confidence among foreign investors in the UK has been wavering.

However, most other regions of the UK have also been affected by price increases, albeit to a lesser degree. While interest rates remain on the lower side, mortgage deals are likely to remain competitive although interest rate rises could easily reverse growth in the market. Affordability will therefore continue to be a key factor in sustaining demand, with the extension of Help to Buy equity loans in England through to 2021 expected to underpin demand for private sector new housing.

In contrast to the private housing sector, public sector housing completions have remained below Government targets, despite significant growth in demand for affordable homes. The main reason for this has been cuts to public sector funding, with the amounts available to housing associations and local authorities having resulted in falling investment in social housing schemes. However, with more housing associations now diversifying into affordable homes construction, there should be more of a balance between demand and supply over the longer term.

“What has been critical to growth in net additions to the UK’s housing stock has been sharp growth in the numbers of conversions, which has been driven by government’s granting of permitted development rights for the conversion of empty offices into dwellings. Although there will inevitably soon be a shortage of empty offices suitable for conversion, we expect there to be a shift towards conversions of vacant High Street facilities” said Keith Taylor, Director of AMA Research. “There has also been a recent relaxation of permitted rights concerning barns and stable conversions, which should contribute towards growth in the total number of conversions over the next few years”.

Taking these factors into consideration, we would expect the combination of completions and conversions to drive further growth in total completions and market values, to over 300,000 and over £42bn by 2021. Market prospects beyond 2019 will largely depend on levels of confidence among both consumers and business within the context of ‘Brexit’, the uncertainty of which leads to some degree of procrastination on the part of investors at this stage.

Purpose-built private rented housing (Build To Rent) is forecast to become one of the key areas of growth within the housebuilding industry. As well as attracting some of the larger housing associations an increasing number of larger private housebuilding groups are also diversifying into this sector, usually in partnership with private investors. To achieve desired rates of return, the focus of their investment is on large-scale apartment developments - in key parts of London, the West Midlands and the North West – which offer economies of scale. As with PBSA, this is mainly being achieved through the increased specification of prefabricated building components and even full offsite building systems such as volumetric modular construction.

The ‘Housebuilding Market Report – UK 2018-2022 Analysis’ report is available now and can be ordered online at www.amaresearch.co.uk or by calling 01242 235724.

Housing deficit and skills shortages lead to sustained growth in the panelised modular building systems market

The UK market for panelised modular building systems has performed relatively strongly over the past 3 years or so, and is estimated to have grown by 26% between 2014 and 2017. The main product type is timber frame building systems, which is competing with light gauge steel, precast concrete and other engineered wood-based panels, including structural insulated panels (SIPS) and cross laminated timber (CLT) systems. Estimates for 2018 onwards are for 4% growth per year, until 2020. 

AMA Research’s definition of the market consists of pre-fabricated, 2-dimensional frames or panels in systems for constructing walls, partitions, roofs and floors, typically supplied to site as systems in flat-pack format.

Until 2016, the market for panelised modular building systems had seen steady demand resulting from improving conditions in the overall construction market, particularly in the residential sector, and the market has benefitted from an improved performance in some key end use sectors, including education, entertainment, leisure and offices, though more recently, the UK construction market has been less positive.

Several trends have been driving the market for panelised modular building systems. The drive towards sustainable development, coupled with the need to meet energy efficiency and carbon reduction targets, would seem to weigh in favour of offsite construction. Panelised modular buildings also generate less waste, typically have superior airtightness, and hence thermal insulation performance, than brick and block construction.

In terms of product mix, timber frame systems still constitute the largest sector of the panelised building systems market with a share estimated to be around 70%, largely due to a larger supply base and extensive usage in the Scottish housebuilding market as well as the self-build sector. By value, the timber frame market alone was worth over double the three other smaller sub-sectors combined, with light steel frame the largest of the three smaller sub-sectors.

The market has also benefitted from rapid development of timber engineering, which has resulted in many high-performance engineered timber products coming onto the market, including the likes of cross laminated timber panels and glue laminated timber products. Further growth in these product options may well further stimulate the overall panelised systems market.

Key end use sectors for panelised modular building systems are private and social housing, apartment blocks, schools, hotels, healthcare and care facilities and purpose-built student accommodation. Residential applications account for around 65–75% of the overall market, reflecting the predominance of timber frame in the building of both private and social housing.

“Over the next few years to 2022, there are several factors that will underpin a steady growth in this sector, probably over and above that forecast across the overall construction industry. These include an increasing use of Building Information Modelling, and an increasing number of public sector procurement frameworks” said Keith Taylor, Director of AMA Research.

“More importantly there is now a strong likelihood of an increase in the use of volumetric and other types of offsite construction method to help meet the chronic housing shortage and cope with the lack of traditional construction skills within the construction industry.”

The ‘Panelised Modular Building Systems Market Report – UK 2018-2022’ report is available now and can be ordered online at www.amaresearch.co.uk or by calling 01242 235724.

Trading up activities continue to underpin growth in the UK window coverings market, but price competition remains a key characteristic

The UK domestic window coverings market has shown overall growth of 15% between 2013 and 2017, but lower growth rates of around 2-3% are currently forecast for 2018. The market has benefited from increased consumer spending in recent years as well as returning confidence in the housing market and the trend of trading up to more premium products for replacement purchases. Window coverings are considered a fashion item, reflecting the latest styles and tastes, therefore encouraging more frequent updates; consumer demand for convenience, has also led to rapid growth in online sales.   

Whilst the window coverings market can be considered mature, the sector is highly innovative, with frequent product introductions. These include new materials, contemporary designs and the uptake of motorised options; the latter are becoming more affordable and mainstream. The shutters sector is also continuing to grow faster than other areas of the market with impressive annual growth rates. The market does however remain highly competitive, with greater transparency of prices on the internet enabling consumers to easily compare product offers and with widespread discounting taking place between suppliers and retailers.

Curtains account for the largest share of the product mix in 2017-18, but given the significant growth in online sales, the sector has been subject to widespread price competition which has constrained overall value growth. In order to differentiate and maintain margins some suppliers have expanded their custom made services. The blinds sector has seen overall growth of 16% between 2013 and 2017 but again has experienced significant price competition from the growth of online sales. However, the advances in fabric and controls technologies have helped to underpin market value as consumers increasingly trade up to more premium products for replacement purchases.

Both the shutters and curtain suspension sectors have benefitted from the current interior design trends that favour controllable shading options as well as highly decorative elements. The shutters sector continues to benefit from the aspirational nature of the product as well as the range of colour options and increasingly attractive prices. Ease of use as well as focus on decorative elements have underpinned modest, but consistent, annual value growth for the curtain suspension systems sector.

The supply of window coverings is fragmented but has been subject to some consolidation amongst major players. Most significant was Hunter Douglas’s acquisition of Hillarys in 2017. The distribution sector is highly diverse and subject to continued growth in online sales by both generalists and specialists in window coverings. Most suppliers with physical stores now have an omni-channel presence, although consumers are becoming more confident in ordering even custom-made products online. 

Jane Tarver of AMA Research said:

“The domestic window coverings market is forecast to grow by 11% overall from 2018-2022 underpinned by the replacement market but with intense price competition continuing to be an overriding characteristic. However, although considered to be mature, the market remains highly innovative with new products, designs and features, such as automation, likely to underpin the trend for trading-up to premium priced products into the medium-term.”

There is likely to be further consolidation within the market place as labour and distribution costs continue to increase and organisations seek to achieve additional economies of scale.  The distribution channel structure is also likely to be affected by the overall structural changes in the retail sector as online shopping continues to gain share. Whilst a blended approach of both online and offline channels is likely to be offered by larger players in the marketplace, price competition will continue to abound online in the lower to mid end of the market.

The ‘Domestic Window Coverings Report – UK 2018-2022’ is available now and can be ordered online at www.amaresearch.co.uk or by calling 01242 235724