The Impact of Renovation in Europe

By Marcel Dresse, B+L Marktdaten GmbH

Not all construction suppliers have benefited from the upswing in the European construction industry in the last 3 years. In particular, building products used in renovation have not developed so dynamically. For this reason, B+L Marktdaten GmbH from Bonn (Germany) has studied renovation and maintenance in five European countries.

Measures in the existing building stock account for more than 50,0 % of the construction investments in most EURO-MAT-countries. Figure 1 shows the shares of new building and renovation / maintenance from all investments for residential building. For the calculation, the investments in residential building for all EURO-MAT-member countries have been considered and cumulated.

Figure 1: Investment in residential building for selected European countries by new building and renovation / maintenance [in % of total investments; cumulated data for Belgium, France, Germany, Ireland, Italy, Lithuania, Luxembourg, Netherlands, Norway, Poland, Slovenia, Spain, Sweden, Switzerland, United Kingdom; f=forecast]

 

In 2013, 60,3 % of all investments in residential building were in the existing building stock (renovation and maintenance). The share of new building is slightly higher nowadays, but coming years renovation will regain importance.

Accordingly, current and future development in renovation and maintenance are of high interest to builders’ merchants and DIY-stores. The development of the German economy in the past 24 months can be regarded as a lesson for the importance of these measures.

Building permits for new buildings increased strongly. Construction companies reported having full order books and new records in revenues. At the same time, sales of certain products (e.g. in roofing) were stagnating despite a booming industry. The answer can be found

  • In a shift of capacities to new building projects: Craftsmen rejected renovation / maintenance projects due to limited workforce capacities.
  • In a shift of building types: Many more flats in multi-family houses are being built while the number of single-family houses permitted is decreasing. Less material is needed per dwelling in multi-family housing construction. For instance, flats sized 70 m² on average require less flooring materials than single-family houses sized 140 m² on average

The general importance of renovation measures holds true for all European countries. Despite challenges from craftsmen’s capacities and shifts in the building types, changes are taking place in the target groups for renovations that will have far-reaching consequences for builders’ merchants and DIY-stores. On average, the renovators are becoming older and less skilled in DIY-terms. Due to changes in demographics and education (young people achieve higher levels of formal education more often), the target groups for renovation and maintenance measures are changing throughout Europe.

An increasing share of home owners are not doing the renovation themselves, but assigning craftsmen to do it for them instead. The cohort of the BabyBoomers is gaining importance in the European renovation markets. The renovators aged 50 and above demand much more service from traders such as complete packages consisting of planning, products and installation. This target group is not only willing to assign professionals to do the renovation. Having achieved a certain step in their careers, they also have the budgets to pay for extra services and premium products.

Figure 2 shows for five European countries that aging renovators are changing the share of renovations that are completed by professional craftsmen instead of DIY. Renovators are the youngest in France, on average, and oldest in Germany and United Kingdom. The share of renovation measures carried out by professionals is much higher in Germany and the United Kingdom (older renovators) than in France, where the renovators are younger on average. With societies becoming older in the next few years, the share of renovation carried out by professionals is likely to increase further.

Figure 2:Correlation between age of renovators and the share of professional work

 

For builders’ merchants throughout Europe, two main challenges derive from these developments.

  • Do-it-for-me instead of do it yourself: Adapting services such as exhibitions, planning, installation to the needs of the target group of BabyBoomers in order to do the renovation for the customer, instead of letting customers do the renovation themselves.
  • Hand in hand with the craftsmen: By offering not only products but also the installation of products and materials the increasing demand for professional support in renovation and maintenance can be fulfilled. Furthermore, shortages in craftsmen capacities can be solved by having a workforce of craftsmen that works primarily for the traders and by supporting craftsmen in time consuming administrative work.

The success of builders’ merchants and DIY-stores in the renovation markets depends on solving these challenges. First examples of a successful implementation of possible solutions already exist. Especially in the sanitary sector some players have developed successful concepts that focus on older renovators (through additional services and support) on one hand, and concepts that offer up-to-date solutions in the digital sphere for the younger targets groups on the other.

Source : B+L Marktdaten