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Press Release: Overbooking on the Superyachts Market: +17% in New Orders in 2007 1 of 3 Windows Market: Eastern Europe will Overtake the West by 2008 Concerning economic growth, the Eastern European countries have bested the West for years now, as they have also done in the construction industry. Despite many challenges, these countries are on a steady growth path. Windows markets in Eastern Europe totalled 47.5 million window units sold in 2006, with a total value of 6.9 billion Euros, according to the recent studies by Interconnection Consulting. It is clear that the market size will multiply in the years to come. Construction Industry on the Upswing The construction industry in most Eastern European countries is fine. With the exception of Hungary, the condition of the sector in the CEE-countries has improved strongly. In Poland and Slovakia, demand for flats is rising and cannot be satisfied. Numbers of building permits issued are also rising. In Russia, the Ukraine, Bulgaria and Romania, construction is booming and will continue to do so for the next 3 years. In all markets residential construction is driven by rising income and low mortgage rates. Eastern Europe also still entices the interest of foreign investors, leading to a bright outlook for non-residential construction in most countries. Even the mild winter had a positive impact on construction in all countries. Bureaucratic hurdles during the issue of building permits, scarcity of qualified workers (e.g. in Poland and Romania), the steep increase of building costs due to rising wages and material costs and, in some countries, rising VAT, act slightly as cooling factors. Window Markets Follow the Trend In Eastern Europe (analysed countries: Bosnia and Herzegovina, Bulgaria, Estonia, Latvia, Lithuania, Croatia, Poland, Romania, Russia, Serbia, Slovakia, Slovenia, Czech Republic, Ukraine and Hungary) 47.5 million window units, representing a value of 6.9 billion Euros, were sold in 2006. All markets taken together, this accounts to an increase of 26.9% in terms of quantity. This figure is of course greatly influenced by the booming Russian and Ukrainian markets, which are currently growing by more than 30% per year. In the more mature CEE-markets, growth amounted to “only” 9.3%, and only Hungary suffered declining quantities. The Baltic countries, which showed falling figures in 2000, are back on track, growing again by more than 20% per year. The Balkan countries (+15.3%), on the other hand, will soon reach their boom peak, which is expected for 2007-2008. Potential for growth in Eastern Europe is by far not yet exhausted. There are too few dwellings and flats, too little modern office space, public buildings are in need of renovation and private dwellings need new, more energy-efficient windows. In the next 4 years, yearly growth will be between 10% and 35%, depending on region. By 2010, market volume will have nearly tripled to 130 million window units sold annually. The value of windows sold will exceed 20 billion Euros. Russia and the Ukraine will continue to show the strongest development – these markets will grow by 34% to 38% per year and will have a market share of 77% of the Eastern European market in 2010. 2/18/2008 12:23 PM Interconnection Consulting: Market Research, Market Study, Market Analysis, Report, Europe Boat Industry Caught in the Bermuda Triangle: Sinking Sales and Tough Perspective Marketing Conference: Office Furniture in Europe Press Release: Laminate Prices Driving the Value of the Hard Floor Market, Set to Reach 5 Billion Euros in 2009 Press Release: CCTV: A 1 Billion Euro Market Looking for Intelligent Surveillance http://www.interconnectionconsulting.com/index.php?presse=69&lang=en Changing Customer Preferences With rising income customer preferences are changing. In past years, price was the prime driver in the decision making process. Thus PVC windows, with their good value-for-money-ratio, were quickly adopted as cheap substitutes for old wooden windows. Share of PVC windows in Eastern Europe was 70.1% in 2006 (quantity). Although the share is not as high in every country, at least every second window sold is made of PVC. Now other factors, like quality, insulation, ecology and design, are taken into account. Preferences move into the direction of wooden and wood-aluminium windows, which are considered to be both ecologically sound and pleasing to the eye. The quantities sold are rising again. In most countries, though, this new affinity towards timber is not enough to stop the loss of market shares, because prices for wood or wood-aluminium windows are 2 to 3 times higher than that of PVC windows. Only in the Baltic countries, where they have the highest share of wood-aluminium in Eastern Europe, is the share of PVC shrinking while wood-aluminium is constantly gaining. In strongly growing markets like Russia, the Ukraine, Romania and Bulgaria, expansion of PVC shares is still going strong, although high quality wood systems are available and wood-aluminium is in high esteem. “Customer preferences are actually shifting within the PVC segment – instead of profile systems from Turkey, Western European brands are chosen, and instead of 3-chamber-profiles, 5-chamber-profiles are being purchased”, explains Dr. Oliver Herzig of Interconnection Consulting. Aluminium is primarily used in the non-residential segment, although a large north-south divide is noticeable: high shares (31%) in the Balkan countries, low shares in Russia and the Ukraine (7.7%). Bright Future In the future the trend toward ecological construction will grow stronger in Eastern Europe too and demand for wooden and wood-aluminium windows will rise. Quantities sold will rise, although, with the exception of the Baltic states, these materials will lose market shares. PVC will remain the best sold material in the next five years. Market concentration will grow more pronounced. Small windows producers will leave the business, medium and large players will establish themselves in their home markets as well as abroad. Simultaneously, Western European brands will penetrate the Eastern markets. IC Market Forecast® is a regularly conducted market and industry analysis for various industry sectors, gathering and analysing vital information for national, European and international markets. The study IC Market Forecast® Windows in Eastern Europe 2007 (per country approx. 80 pages plus data as Pivot table) is available at Interconnection Consulting for € 950.- (starting price for one country) Interconnection Consulting is one of the leading European market research companies in the area of industry-focused services. The main emphasis is on complex industry-oriented market research. In addition to the windows market, IC Consulting analyses approx. 30 industries in all European countries and conducts market studies, competition and distribution reports. Furthermore, IC Consulting conducts ad-hoc research in the fields of brand value, pricing, product evaluation, customer satisfaction and market and distribution analysis. Industry Page Windows Austria Spain 2 of 3 +43 1 5854623 0 +34 93 4363613 info@interconnectionconsulting.com office@interconnection.es 2/18/2008 12:23 PM Interconnection Consulting: Market Research, Market Study, Market Analysis, Report, Europe Germany +49 8322 809145 http://www.interconnectionconsulting.com/index.php?presse=69&lang=en info@interconnectionconsulting.com Copyright 2008 IC CONSULTING GMBH | Contact | Imprint | Info-Line | Wien +43 1 5854623 0 3 of 3 2/18/2008 12:23 PM
