Positive five-year forecast for CCTV and access control markets

18 Sep 08

Market analyst MBD has just issued its five-year development forecasts for the CCTV and access control equipment sectors.

CCTV: market review 2003-2007

In 2007, sales and rental income of CCTV equipment increased by an estimated 4% to £1,147 million. That represents an overall growth of 14% when compared with 2003. During the five-year review period, annual growth levels have been seen to fluctuate, with a low of 1% recorded in 2004 and a high of 7% reported the year before.

Much of the growth in the market has been driven by the switch from analogue to digital CCTV and the continuing emergence of networked video solutions. The CCTV market has also benefited from increased construction output during much of the review period. The commercial office sector, as well as the health and education sectors have all witnessed positive growth.

Moreover, the commercial sector continues to provide growth opportunities for CCTV installations as the trend of ‘substituting’ security guarding for surveillance systems continues. Other solutions areas that have also shown strong growth potential include mobile CCTV, Automatic Number Plate Recognition and algorithmic systems.

Market Forecast 2008-2012

The value of the UK’s CCTV systems market (including both sales and rental income) is expected to increase by a moderate 1% in real terms during 2008, partly reflecting the current downturn in construction output and the slowdown in economic growth. This is expected to be followed by slightly stronger annual growth of between 2% and 3% during the following four years.

By 2012, the value of the market is forecast to reach £1,265 million (at 2007 prices), representing an overall growth of 10% in real terms when compared with 2007. The CCTV market is fully expected to benefit from increased demand for public security, generated in the main by the forthcoming Olympic Games. The need for tightening security in public areas is also likely to boost demand from the Government, retail and transport sectors.

Demand for digital and networked systems is expected to continue its current buoyancy, although prices are anticipated to fall in these sectors. Further sectors of the CCTV market expected to show strong growth potential include remote monitoring services, rapid deployment cameras and alarm-activated systems. However, intense price competition and increased import penetration from low cost manufacturers at the lower end of the market are expected to continue to feature in the market.

Value of installations on the rise

The value of CCTV installations is anticipated to increase throughout the five-year forecast period up to 2012, culminating in a growth of 7% in real terms. However, the proportional importance of the sector to the total market is forecast to decline moderately from 46% in 2007 to 45% in 2012. This reflects the increasing popularity of digital and networked systems (which tend to have lower installation costs).

Sales of CCTV equipment are also projected to demonstrate real term growth throughout the forecast period. In 2012, the value of equipment sales is anticipated to reach £453 million (equivalent to growth of 13% in real terms in relation to last year). Despite value growth, the sector is anticipated to remain somewhat constrained by falling prices and intense price competition.

The importance of CCTV maintenance contracts is expected to be maintained at around 19% during the forecast period. In value terms, maintenance contracts are projected to increase by a cumulative 12% between 2007 and 2012, reaching a level of £242.9 million in the latter year. Nonetheless, stronger growth will likely be hindered by the rising popularity of IP-enabled CCTV systems which tend to exhibit lower maintenance costs.

Access control: market review 2003-2007

The value of the access control market (including sales and rental income) is estimated to have reached £656 million in 2007, equivalent to a nominal growth of 5% in the year. This follows similar annual growth levels of between 5% and 7% recorded in the previous three years.

Since 2003, the value of the market has increased by an estimated 26%. Furthermore, access control has continued to gain share from the overarching security systems and alarms market during recent years, largely reflecting the development of more sophisticated and higher value systems.

Furthermore, demand has been generated by the heightened perceived threat of terrorism which has increased the focus on security in commercial and public buildings. Growth has also been facilitated by increased construction output in the private commercial sector, and the rise in the number of new flats and apartments. Insurance requirements have also become more stringent in recent years, in turn increasing the demand for access control solutions.

2008-2012: the market forecast

Demand for access control equipment and systems (including sales and rental income) is expected to increase throughout the five-year forecast period up to 2012. In the latter year, the value of the market is expected to reach £740 million at 2007 prices, representing an overall growth of 13% in real terms when compared to 2007.

Growth levels are expected to be more moderate in the short term, mirroring the slowdown in construction activity. Nevertheless, the access control equipment and systems sector should continue to be one of the most buoyant areas of the wider security alarms and systems market during the forecast period (with the share of the sector forecast to rise moderately from 23% in 2007 up to 24% by the year 2012).

During the forecast period, the market for access control is projected to continue to benefit from the trend towards integrated security solutions and advanced networked systems. Demand for IP-based open architecture systems – enabling the integration of access control with other security-related solutions – is likely to continue, although IP-enabled systems are anticipated to command only a small share of the market during the forecast period.

Demand for security in flats and apartments

Moreover, construction output is expected to return to growth in the medium term, generating further demand for access control systems. Further demand growth for access control is expected from the flats and apartments arena, although the share of such properties in new build sector isn’t expected to rise much further over the coming years. The expanding extra care housing sector also affords growth opportunities for the access control sector.

In the commercial and public sectors, demand for access control systems is likely to increase due to continued perceived threats of imminent terrorist attacks. Inevitably, this has led to a renewed focus on security. Furthermore, due to increased environmental awareness and rising energy costs. the combination of access control with building management systems is expected to become more popular (most notably in the commercial sector, with the aim of improving energy efficiency).

The market share of online systems

Sales of online access control systems are forecast to increase in real terms during each year up to 2012. In the latter year, the value of the sector is expected to reach £369.4 million (representing an overall growth of 19% in real terms when compared with 2007).

Furthermore, the sector is anticipated to demonstrate the strongest overall development during the forecast period, with the share increasing from 48% in 2007 to 50% in 2012. Demand for increasingly integrated and technologically-advanced products and systems that can be managed over the Internet are expected to continue to drive growth during the forecast period.

Audio/video entry equipment sales and rental income are expected to continue to account for the second largest share of the access control market, commanding a relatively static share of 34% of the total throughout the forecast period. In value terms, demand for audio/video entry systems is anticipated to increase by 15% in real terms between 2007 and 2012. The sector is likely to continue to benefit from the high share accounted for by flats and apartments in total residential construction.

The importance of stand-alone systems

The importance of stand-alone systems is anticipated to contract from 19% in 2007 to a more moderate 16% in 2012, in turn reflecting the relative maturity of the sector. Demand for stand-alone systems is expected to decline during much of the forecast period, albeit at moderate levels. Overall, between 2007 and 2012, sales in the sector are projected to contract by a cumulative 5% in real terms to £117.7 million (at 2007 prices) in the latter year.

Copies of the ‘UK CCTV Market Development Report’ and the ‘UK Access Control Market Development Report’ are priced at £600 each. For details of how to order click on the link provided on the right hand panel of this page.