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