Andrew Giles, Head of Worldwide Market Intelligence at BSRIA, told a conference organised by the Chartered Institution of Building Services Engineers the sector will be slightly cushioned from the full impact of the credit crunch as it is not overly reliant on new build.
He said: “We expect a minus eight per cent fall next year and a further seven per cent fall after that but in the context of the overall market that is not that bad.'
The blow of declining commercial and industrial new build will be softened by the fact more than three quarters of the commercial boiler market is in the more stable repair, maintenance and improvement (RMI) sector.
Fall follows 'pretty good' year
Mr Giles pointed out that commercial sales had been “pretty good” this year and BSRIA estimates the commercial boiler market will be up by three per cent in 2008, but sales will then fall sharply next year.
He said: “We have just got a slow down we haven’t seen anything more terrible than that – unless the banking system is going to collapse which I don’t think it is going to.”
BSRIA estimates the domestic boiler market will fall by five per cent this year and forecasts a further nine per cent drop next year with a slight recovery to minus two per cent growth in 2010.
He emphasised the domestic boiler market was difficult to predict due to the nature of housing demand and consumer confidence, but he said the domestic sector usually responded more quickly to changes in market conditions than commercial.
Mr Giles said: “There is a lag effect as commercial boilers go in at the end of projects so things you see in construction output figures sometimes have a six month delay effect.'
Despite his efforts to put the downturn into context Mr Giles did admit that feedback from the industry was pretty bleak.
A survey of 100 m&e consultants carried out by BSRIA in November showed expectations for the next three to six months were in long term decline particularly in the offices and industrial sector.
|Mr Giles said the coming years would be defined by several key Issues: |
Increasing competition - traditional air conditioning firms will be looking to move into the heating sector while boiler manufacturers will continue to diversify
Condensing growth - The continuing trend towards condensing technology will gather pace in the commercial sector and could be backed up by European legislation
The downsizing of space heating load - Better design, Government guidelines and improved technology will push down heating loads, but hot water demand is likely to remain constant
Energy prices - The cost of gas and electricity has been the subject of fierce debate and has a major impact on the choice of technology. Mr Giles said: “They have now come down so they are less of an issue now, but they always have an opportunity to spike up again and the uncertainty around oil prices has created a decline in that market.
Shrinking opportunities in export markets - Payment problems are undermining confidence in Eastern Europe and Russia although opportunities remain in Iran, North Africa and some rapidly growing former Soviet states.
Mr Giles said: “Generally the picture is I’m afraid getting quite bleak in terms of export opportunities.”
Limited renewable take up despite investment - Mr Giles said: “A lot of diversification moves are going on. The offer from the big boiler manufacturers is increasing for a whole range of boiler products and renewable products together.”
But, he added: “Unless we see some major movement from industry and government then I don’t think we will see a major move into the commercial market by renewables.”
Heat pumps could be a ‘a significant market at the smaller end’ - Mr Giles said: “We see more and more heat pumps coming in to the market and more and more Japanese companies will be pushing these.
'They will be pushing them in the commercial sector where they know they have a really good reputation. We will see this more and more in the coming years, but the pace is difficult to gauge.”