Modular space solutions often have the functionality and quality matching on-site built buildings and they can be used to serve both temporary short-term and long-term needs. They are offered to several end-customer segments including school, day care, offices and other premises in the private and public sector.
Adapteo’s total addressable market consists of short- and long-term rental and sale of modular space solutions in Sweden, Finland, Denmark, Norway and Germany. The total addressable market amounted to approximately EUR 5.9 billion in 2017. Adapteo operates in the rental market in Sweden, Finland, Denmark, Norway and Germany, and in the sales market in Sweden, Finland and Norway. In Northern Europe, Adapteo is the largest player in the rental market and holds an approximately 13% market share.*
In Northern Europe, Adapteo is the largest player in the rental market with a strong position in Finland, Sweden, Norway and Denmark. In addition to the Nordics, Adapteo has rental operations also in Germany.*
In the sales market, Adapteo has an established position in Sweden. The Group has also recently entered the sales market in Finland and Norway. Adapteo is currently not present in the sales market in other geographies.**
*Source: Management Consultant Analyses. Measured by revenue. Revenues used in the assessment of Adapteo’s market share in the Rental Market are estimates based on information from public sources on the combined 2017 revenue of the operational companies of Cramo’s Modular Space business division operating in Sweden, Finland, Norway, Denmark and Germany as well as the Swedish, Finnish, Danish, and Norwegian companies of Temporent.
**Source: Management consultant analyses
Market positions are indicative, as they may be based on incomprehensive information.
In 2017, social infrastructure related customer segments, including school, day care, health and social care and special accommodation, accounted for approximately 72% of the addressable rental market. Offices and other premises accounted for the remaining approximately 24% and 4% of the addressable rental market, respectively.**
In the addressable sales market, the largest end-customer segment was the residential segment (approximately 74%), to which Adapteo currently does not sell its solutions but where it sees future potential. Social infrastructure end-customer segments accounted for approximately 21% of the addressable sales market in total. Offices and other premises accounted for the remaining approximately 4% and 1% of the addressable sales market, respectively.**
**Source: Management consultant analyses
Population growth and urbanisation drive regional needs for space in growth centres and net loss areas alike.
Between 2002–2017, the population in the Nordic countries has increased by 11% in total, whereas the population in the Nordic capital regions has increased by approximately 21%.***
The rapidly ageing population and the growing number of children create significant opportunities for Modular Space Solutions in the school, day care and health and social care customer segments.
In Sweden, Norway and Finland, the number of children aged 1–6 years enrolled in day care has increased by 47% between 2002 and 2017. ****
The building stock is ageing in the Nordics and Germany, which increases the need for both renovation and new building construction, driving the need for temporary and permanent space. The ageing of buildings is one of the causes for, among other things, indoor air problems that pose a health hazard.
Approximately half of the Nordic educational building stock has reached or is approaching the age of 50 in the forthcoming years, which is the age when the need for renovation services typically increases.**
Modular Space Solutions have numerous advantages, including quality, speed of delivery, cost efficiency, attractive customer economics and flexible usage of modular space.***
The rental market and sales market have outgrown the new building volume in 2013–2017, and the trend is expected to continue.**
In most cases, public customers have the legal obligation to deliver space to varying needs. The market is to a large extent impacted by underlying demand drivers, most importantly regional population development and renovation needs.
Social infrastructure related customer segment, which is predominated by the public sector, account for approximately 72% of the addressable rental market of modular space solutions.**
In addition to the structural market drivers and trends, according to the management’s view, private sector growth and industrial activity support the development of the market and increase the need for modular space solutions, particularly in the office customer segment.
** Source: Management Consultant Analyses
***Calculations based on data from Statistics Finland Population structure, Statistics Sweden, Statistics Norway and Statistics Denmark. Includes the Helsinki Capital Region in Finland, Stockholm Urban Area in Sweden, Greater Oslo Region in Norway and the Copenhagen Urban Area in Denmark.
****Calculations based on data from The National Institute for Health and Welfare (THL): Statistical Report on Childcare 2017, Statistics Sweden and Statistics Norway. Denmark excluded due to unavailability of long-term data.
Adapteo’s business operations are dependent on the development of the rental and sales markets. Overall, the company estimates that the demand for modular space solutions will continue to be supported by structural market drivers such as an ageing building stock, urbanization, demographic changes as well as the increasing need for social infrastructure due to a growing number of children and elderly people. Our mid-term market outlook remains positive for both Business Areas, with strong underlying and low cyclical needs driving the demand. The rental market is expected to grow over 10 per cent in Finland and Denmark and 5 to 10 per cent in Sweden, Norway and Germany. During the year of 2019, public market activity has been lower than usual in Sweden with the number of new public tenders being historically low, but municipalities’ long-term need for schools and day care centres remains. Also, in Finland public market activity was lower than usual during the first part of the year, but from the beginning of Q3 started increasing market demand has continued. In the Business Area Permanent Space, the total market is expected to grow 5 to 10 per cent (including residential customer segment) and Adapteo’s core sales market (mainly social infrastructure and office customer segments) is expected to grow over 10 per cent. The market in Sweden for Business Area Permanent Space core segments School and Day care have shown a downturn in 2019 but current outlook for 2020 is positive. Market in Finland is indicating strong demand mainly for long-term rentals. The outlook for Norway is positive.