BOSTON--(Lux Research. Based on market demand from both new buildings and retrofit projects, the demand for building thermal envelope materials from 2012 to 2015 will be a staggering 5.6 billion m2.)--Some worry that China’s robust construction industry might be hitting a wall. But new drivers, led notably by thermal envelope materials, are emerging to create a new opportunity, according to
“The combination of policies, economic goals, and underlying megatrends dictates a change in approach to the ‘build it quick, build it cheap’ mantra that has driven the market to date”
“The combination of policies, economic goals, and underlying megatrends dictates a change in approach to the ‘build it quick, build it cheap’ mantra that has driven the market to date,” said Jerrold Wang, Lux Research Associate and the lead author of the report titled, “Go North: The Path to Performance-Driven Profits in China's Construction Materials Market.”
Through modeling existing building stock, new construction rates, energy efficiency targets, temperature profiles, energy costs, green building momentum, regulatory enforcement and retrofit targets, Lux Research analysts derived the opportunities for different building thermal envelope solutions. Among their findings:
- Climate a key driver. Low-cost, low-performance materials will dominate the temperate south but developers of high-performance materials need to focus on China’s cooler north, where these solutions make most economic sense on account of high energy prices and high heating/cooling needs.
- Largest markets aren’t the obvious one. Among the provinces, Shandong (463 million m2), Guangdong (449 million m2) and Henan (387 million m2) offer the greatest opportunities. Notably, the Tier 1 cities of Shanghai, Beijing, Chongqing and Tianjin aren’t at the top of the list, as they have less floor area of buildings.
- Policy is significant. According to the 12th Five Year Plan, China will require 95% of new buildings to meet a mandatory energy savings target of 65% over the 2005 figure. It also plans energy saving retrofit projects for at least 450 million m2 of residential buildings and 60 million m2 of commercial and municipal buildings.
The report, titled “Go North: The Path to Performance-Driven Profits in China's Construction Materials Market,” is part of the Lux Research China Innovation Intelligence service.
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