There are a number of market trends which impact the balcony market. The most important of these trends are:
Transfer of ownership to tenant-owner associations
Tenant-owner associations, which is Balco’s most common customer group, is the most common form of ownership of residential homes in Sweden and is expected to continue to show strong growth in the future. This is primarily being driven by the fact that publicly and privately-owned properties are being sold and converted into tenant-owner associations in order to finance new construction and to finance maintenance and investments in existing properties. This has a positive effect on the balcony market since tenant-owner associations is the customer segment most inclined to make value-enhancing investments.
Continued low level of penetration for glazed balconies on the market
In Sweden, the share of glazed balconies of the total market is relatively low, approximately 11%. This is a relatively small share when compared with Finland where the share of glazed balconies is approximately 46%. The high degree of penetration and the rapid pace in Finland is considered to be a result of the many advantages glazed balconies provide as compared with traditional balconies, in combination with less stringent building permit requirements. This indicates great potential for increased penetration of glazed balconies on Other Markets.
Environmental legislation and energy savings
A global trend towards reduced energy consumption has resulted in stricter legislation and regulations requiring higher energy efficiency and a reduced environmental impact.
There is also a greater degree of consciousness regarding energy and the environment amongst property owners and the increase in energy prices is driving demand for glazed balcony systems which is one of the most energy efficient solutions.
Comfort and design
Glazed balconies contribute to increased enjoyment, comfort and sound insulation. Glazed balconies maintain a higher temperature as compared with traditional balconies, increasing usability, for example in the Nordic region from approximately four months per year to eight months per year, while at the same time they contribute to lower energy use. Balconies are a large part of the exterior appearance of a property which increases the focus on design and attractiveness which can raise the standard of the entire residential area.
The balcony market is affected by a number of external driving forces. A number of these are:
Price trends on the residential homes market
An factor is a property owner’s decision to invest and an underlying driving force for both the renovation market as well as the new construction market is the price trend on the residential market. The price of homes has developed positively over recent years with prices for apartments in major cities accounting for most of the significant increase.
An factor which affects the willingness of property owners to invest is changes in the disposable income of households. Disposable income has increased in the Nordic region since 2010, with the strongest increase in Sweden and Norway.
An factor which affects the requirements property owners have for making a return, and which therefore has major consequential effects on the rate of investment in the construction industry, is the prevailing interest rates. A low rate of interest increases willingness to invest and makes it easier to finance home investments at the same time as it increases the possibility for tenant-owner associations to free up money and increase cash on hand in the refinancing of loans.
The balcony market is affected by the general economy.
Trends in the economy for construction industry
The balcony market is a niche market within the broader construction market. The renovation market, which is the most important market for Balco, is driven by the composition and age of the property portfolio while the new construction market is driven by the pace of new construction of residences. The renovation market is more stable and less cyclical than the new construction market.
The balcony market is affected and controlled by regulations and other political measures such as tax relief and subsidies.