Market
Balco’s main markets
Balco Group is the market leader in the Nordic region and has a position as a challenger in other markets in northern Europe. A majority of the Group's turnover comes from the renovation segment, with housing associations being the largest customer group. Common to all geographic markets is a pent-up need for renovation of an ageing property portfolio, with a large proportion of properties built between 1940 and 1980.
The value of Balco Group's combined markets was estimated at approximately SEK 40 billion. The largest part, approximately SEK 27 billion, consists of renovation of balconies for apartment buildings and the remainder is new production. Our market is primarily driven by an increasingly older stock of residential properties that are in need of renovation, that residents want an increased quality of life, an opportunity for an increase in the value of the property and a need to reduce the use of energy. The company's main markets are Sweden, Norway and Denmark, which corresponds to a value of SEK 6 billion in 2022, of which SEK 4 billion can be derived for renovations. The renovation segment is Balco Group’s largest, representing 71% of total revenue in 2024.
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 (43%)
- Other Scandinavia (46%)
- Other Europe (11%)
Market characteristics
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.
Trends
There are a number of market trends which impact the balcony market. The most important of these trends are:
Trend: As consumers' interest in reducing their climate impact grows and energy costs continue to rise, more and more customers are seeking energy-efficient solutions for their homes. There is also significant interest in balconies, roof terraces, and other solutions that create outdoor environments directly attached to the spaces where people live.
Impact: Balco Group offers glazed balconies that have been proven to yield energy savings of up to 30%. The group's subsidiaries also offer a wide variety of other balcony solutions and services, such as facade renovation, solar panel installation, insulation, and heat recovery.
Trend: There is a high demand for balcony solutions in big cities, but at the same time, due to space constraints, a smooth assembly process and delivery is necessary when different suppliers have to work together in a limited space. Furthermore, obtaining building permits can also be a slow process in view of stringent requirements related to a building's character and cultural heritage. Balconies with the right appearance and design can make this process more efficient.
Impact: As a market leader, Balco Group is well versed in building
permit processes and always adapts the product design
to fulfil local requirements. With complete control over
its value chain, Balco Group can also provide turnkey contracting services, including installation performed by the
group's own staff. Some of the group's subsidiaries offer
so-called “city balconies”, which can be easily adapted to
any building and feature an aesthetic that fits perfectly
into urban environments.
Trend: The current state of the economy, marked by high interest rates, has prompted residential associations and market actors to make more cautious decisions when it comes to new investments. In spite of this, there are increasing need for renovations of existing properties and construction of new housing .
Impact: Both inside and outside of Sweden, Balco Group actively strives to build long-term relationships with its customers. Through its subsidiaries, the group is firmly anchored in many locations, and it has a well-developed sales process through which projects can be developed out over time in collaboration with the group's customers. In recent years, the Group has implemented efficiency improvements in production, which enables the Group to quickly meet demand in the event of a change in market conditions.
Driving forces
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.
