Balco’s main markets
The balcony market involves primarily the renovation of existing balconies and the installation of new balconies on existing properties. It also includes the installation of balconies during the construction of new properties.
The total value of Balco's combined markets is estimated to 38 billion SEK. The largest part of the market, about SEK 27 billion, is in renovating balconies for apartment buildings and the remainder of the market is in new build. Essentially, our market is driven by an ageing stock of residential properties in need of renovation, residents wanting a better quality of life, an opportunity to increase the value of their property and a need to reduce energy consumption. Balco’s main markets are Sweden, Norway and Denmark. The value of the balcony markets in these countries was approximately SEK 6 billion in 2022, of which SEK 4 billion came from the renovation segment. The renovation segment is Balco’s focus segment and accounted for 87% of total net sales in 2022. In a number of selectively chosen projects, Balco also manufactures, sells and installs maritime balconies, which are sold to cruise ships in Europe where Balco’s model is appropriate.
Revenue by geographical market
Balco is the leading company on the Nordic balconies market and is the market leader in Sweden and Norway and the second largest company in this market in Denmark.
- Sweden (63%)
- Other Scandinavia (26%)
- Other Europe (11%)
The Nordic balcony market is fragmented and consists of two groups of companies. On one hand, there are large companies that are vertically integrated into the value chain and that operate in several countries. On the other hand, there are a number of smaller local balcony installers, balcony manufacturers, and concrete renovation contractors. The market can be divided into two market segments: renovation and new construction, and into different customer segments. The customer segments are broken down based on the type of property owner with varying needs, requirements, and goals. In the renovation segment, there are three types of customer segments: tenant-owner associations, private landlords, and municipal housing. Construction companies make up the sole customer segment in new construction.
The Nordic market is characterized by national and regional differences regarding building standards, rules and regulations, materials and design preferences. Finland has a long tradition and high market penetration of glazed balconies. In Sweden and Norway, open balconies are the most common solution, with increasing growth for glazed solutions where Balco sees a great deal of potential. Within the market segments, glazed balconies constitute a significant share of the renovation segment, but a smaller share of the new construction segment. In new construction, construction companies normally purchase open balconies from a third party, install a concrete plate themselves, and have the balcony suppliers carry out the installation of the railing solution.
AVERAGE ANNUAL GROWTH IN SWEDEN 2015-2019
AVERAGE ANNUAL GROWTH IN NORWAY 2015-2019
AVERAGE ANNUAL GROWTH IN DENMARK 2015-2019
38 SEK bn
EXPECTED MARKET VALUE IN 2022
There are a number of market trends which impact the balcony market. The most important of these trends are:
Trend: The unsettled global situation is generating uncertainty in the market. Increased costs mean that decision-making processes take longer and market players act with a different degree of caution than before. However, the need for balconies has not come to a halt. Since the pandemic, interest in balconies has steadily increased as the population continues to rise. This creates a need for renovating and installing new balconies on existing properties, as well as for new properties with balconies.
Impact: Balco Group is the largest in the renovation segment, and despite the troubled global situation, we are seeing that demand for renovation and installation of balconies in the market continues to be strong. On the other hand, we are also seeing customer buying and decision-making processes becoming protracted. Post-pandemic, we are therefore focusing even more on visiting tenant-owner associations, answering questions and having more extensive dialogues about potential orders. We want to create projects with the customer, and we have a large sales team with the capacity to carry out even more visits. As the world moves into more stable times, the fact that we and our subsidiaries are responsible for the whole process – from production to installation – means we can get to work quickly on an order.
Trend: A sustainable society with responsibly produced products is a given in the expectations of today’s consumers. The ongoing energy crisis has accelerated the global trend towards reduced energy consumption and thus a lower environmental impact. For property owners, energy and environmental issues are therefore important, as proper management helps ensure lower costs and less of a negative environmental impact.
Impact: To help our customers make the transition to ‘green properties’, we offer both products and advice. Our glazed balconies have a long life span and insulating effect, which results in reducing environmental impact and energy consumption. Balco’s glazed balconies have a documented energy-saving effect of up to 30%. To convert the property into a ‘green property’, we offer a review of the property’s energy performance. Based on this analysis, several energy-saving measures can be proposed in addition to those that come when installing a glazed balcony, such as solar panels, roof insulation, facade insulation, window replacement and heat recovery.
Trend: After the coronavirus pandemic, balconies have gained in popularity and are now among the most important attributes when people are looking for an apartment. Balconies offer residents the opportunity to spend time outdoors in close proximity to their home, which is valuable for those who live in an urban environment, work from home and have no garden. A glazed balcony prolongs use by maintaining a comfortable temperature for a longer period of the year, while reducing energy consumption. People spending more time on their glazed balconies ensures better monitoring of the area, thus increasing security.
Impact: Balco Group is a leader in glazed balconies in its main markets. Our expertise lies in renovating or installing new balconies on existing buildings. In this way, we help make properties without balconies more attractive and sustainable, which also increases the apartment value. As a Group we have a broad offering, with subsidiaries providing several different models of glazed balconies that can be adapted to the customer’s needs.
Trend: As requirements regarding appearance increase when new balconies are installed on existing buildings, design is playing an increasingly important role. New regulations aimed at preserving the character and cultural heritage of buildings risk extending building permit processes for different designs, especially for inner-city balconies. A balcony with the right design can therefore help ensure the process runs more smoothly and improve the exterior of the property, while making the residential area more attractive and improving quality of life for the residents of the apartment.
Impact: Balco Group wants to ensure that all tenant-owner associations have the opportunity to build new balconies or install balconies on their buildings. With our knowledge and experience, we have a good understanding of which designs are approved for building permits. Our product range and various product offerings are designed to meet design requirements and to increase the likelihood of a successful building permit application. For example, for our open balcony Levitate, we also offer a web-based configuration that allows us to work on the design at the planning stage.
Trend: In the major cities, there is currently a greater need for efficiency when constructing new apartments.As the population grows, cities also become more densely populated. More buildings are being built with several floors because of the shortage and high cost of land. This also means a lack of space during construction itself, and different contractors have to work together to be able to work efficiently and safely in a compressed area.
Impact: Thanks to our product development resources, we are able to come up with innovative solutions that can change and improve the building process. One example is Levitate – a simple and safe balcony specially designed for new build in urban areas. The flexible modular design allows our installers to be very efficient on site and quickly install the balcony in a short period of time without compromising on safety and quality.
The balcony market is affected by a number of external driving forces. A number of these are:
A factor in 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 in 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.
A 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.
A 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. Low interest rates increase willingness to invest and make 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.
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.