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Market

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 36 billion SEK. Balco’s main markets are Sweden, Norway and Denmark. The value of the balcony markets in these countries was approximately SEK 5.9 billion in 2021, of which SEK 3.6 billion came from the renovation segment which is Balco’s focus segment. 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. The value of maritime balconies in Europe was SEK 1.1 billion in 2019.

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Revenue per country

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%)
  • Norway (11%)
  • Denmark (13%)
  • Other (13%)

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.

10,2%

AVERAGE ANNUAL GROWTH IN SWEDEN 2015-2019

5,8%

AVERAGE ANNUAL GROWTH IN NORWAY 2015-2019

4,3%

AVERAGE ANNUAL GROWTH IN DENMARK 2015-2019

38 SEK bn

EXPECTED MARKET VALUE IN 2022

Trends

There are a number of market trends which impact the balcony market. The most important of these trends are:

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 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.

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.

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.

Glazed balconies contribute to increased enjoyment, comfort and sound insulation. Glazed balconies maintain a higher temperature compared with traditional balconies. This increases 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.

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.

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