BSRIA expects Brexit to reduce market growth

Published:  06 October, 2016

Growth forecasts for the HVAC and smart-energy market landscape have been substantially reduced following the Brexit vote, according to research by BSRIA. Before the Brexit vote, growth for 2016 was expected to be 3.1%, but BSRIA research with suppliers now anticipates that growth will shrink to 1.1%, knocking off £95 million compared with the pre-Brexit view. These markets are estimated to be worth £4.5 billion a year in the UK.

For the air-conditioning sector, the growth forecast has dropped from 12.8% down to 5.5%. Smaller splits have suffered due to a cool summer in the first half of the year. There have also been issues with the distribution chain, higher-than-expected residual stocks and a weakening in the critical retail market. Delays in investment decisions that may have been prompted by Brexit can affect these products very quickly.

VRF and central-plant products are much more closely linked to larger projects close to completion — typically new and refurbished hotels and offices. Project delays resulting from Brexit may have a small effect in 2016, but will mainly affect the market between 2017 and 2019.

However, floor-space statistics suggest a big growth in completed projects in 2017, which will mask any Brexit effect until 2018.

Also, some completions may be delayed from 2016 to 2017 as a result of Brexit, hence the reduction in BSRIA’s 2016 forecasts.

In the smart-technologies market, commercial fire and security and building-control products account for 68% of a £1.6 billion market. These products are more likely to be put in towards the end of commercial projects. In 2017, the continued pull of commercial projects nearing completion that were started two years ago will mask any further falls from Brexit, with almost no effect on fire as it is regulation driven.

Building-control products should follow a similar pattern to central plant, but growth is lower as many sales are to public areas such as heating, education and central government.

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