Germany Elevator and Escalator Market - Size and Growth Forecast 2024-2029

MARKET OUTLOOK

The Germany elevator and escalator market by new installations accounted for 23.3 thousand units in 2023 and is expected to reach 28.3 thousand units by 2029, growing at a CAGR of 3.32% during the forecast period. The aging building stock and need for maintenance, modernization, and cybersecurity, as well as increasing investments in infrastructure and foreign investment, are long-term demand drivers for the Germany elevator and escalator market.

EIB Investments in Various Projects and Aging Population to Boost the Demand for New Installations in the Germany Elevator and Escalator Market

• In March 2024, the EIB collaborated with NRW.BANK assists the German state of North Rhine-Westphalia in housing refugees. Through a €200 million ($217.4 million) framework loan, the EIB will finance the construction, refurbishment, and extension of residential buildings to accommodate refugees across North Rhine-Westphalia. This funding will be provided to local authorities in the state through NRW.BANK's refugee program offers loans with favorable terms.
• The share of the aging population (65+ years) stood at 21.8% of the total population in 2020. It is expected to increase to 25.4% of the total population in 2030 and 28.0% of the total population in 2050. This may generate increased demand for hospitals and elderly care infrastructure. This also puts further pressure on labor supply in the construction sector. With the increased demand for hospitals and elderly care infrastructure, there is a necessity for feasible accessibility, which further propels the Germany elevator and escalator market in the medical sector.
• Socio-economic and political developments have influenced Germany's housing construction history since 1948. Post-war, significant efforts were made to rebuild infrastructure and provide housing for displaced populations. From 1949 to 1978, construction surged, reaching 17,275 units. From 1978 to 1990, construction decreased, and from 1991 to 2010, it grew moderately, reaching 6,736 units. Since 2011, construction has declined significantly, with only 1,250 units built. These trends guide policymakers and urban planners in addressing current and future housing needs.

Transformation to Digitization and Increase Demand for Energy-Efficient Elevators and Escalators to Boost Demand for Elevators

• As of 2023, more than half of German companies reported experiencing hacker attacks within the past year, emphasizing the urgency of addressing cybersecurity in all sectors, including elevators. TÜV Rheinland recommends regular inspections to identify and mitigate potential vulnerabilities, ensuring the safety and reliability of elevator systems. The rise of AI in the Germany elevator and escalator market is another transformative force. AI-powered systems can enhance predictive maintenance by analyzing data from various sensors to anticipate potential issues before they become critical. This proactive approach can significantly reduce downtime and maintenance costs, ensuring elevators operate smoothly and efficiently. AI can also optimize elevator traffic management in high-rise buildings, improving wait times and energy efficiency.
• Data from the European Building Stock Observatory indicates a gradual decrease in emissions from Scope 1 and Scope 2 sources over time, comparing the timeline of 1990-2021. This trend suggests potential enhancements in energy efficiency or a transition to cleaner energy sources, which would also affect elevator operation, necessitating energy-efficient practices. Nevertheless, elevators remain a crucial factor in emission reduction efforts for residential buildings. There are opportunities for further efficiency improvements and adopting sustainable technologies to alleviate their environmental footprint. Furthermore, ongoing maintenance and modernization initiatives in the Germany elevator and escalator market can contribute to achieving emission reduction targets by ensuring optimal energy performance and equipment longevity.

KEY HIGHLIGHTS

• In the first half of 2023, new construction in Germany experienced a significant decline, with a 47% drop in new building starts compared to the average of the past two years. Home building saw an even steeper decrease of 54%. This reflects the challenging conditions facing the real estate sector, marked by caution in project development and a sharp downturn in transactions and prices.
• The industry is seeking multi-billion-euro support from the government, highlighting the severity of the situation. The city of Frankfurt, known for its skyline, is also impacted, with delays in construction projects as developers hope for cost reductions. The volume of property under development has decreased, particularly in larger cities, with residential and hotel development seeing significant declines. Financing challenges have further hindered projects, leading to a slow real estate investment market slowdown.
• Based on KONE elevator start data for 2023, the German elevator market will show recovery post-COVID-19, evident in elevator journey data from Berlin, Hamburg, and Munich. While urban areas saw a 70-71% recovery in elevator starts, hotel-related usage varied. Berlin's 90% recovery suggests robust hospitality activity, while Hamburg's 114% indicates thriving tourism. Munich's 83% suggests slower growth. Overall, the market's positive trajectory highlights rebounding urban activity, especially in hospitality, with continued monitoring crucial for industry insights.
• TÜV Rheinland reported safety issues in about half of Germany's elevators in 2021, with 3,000 units shut down due to dangerous defects in 2022. Berlin had a quarter of elevators without errors, while Munich performed better. Since 2015, stricter regulations under the Industrial Safety Ordinance have mandated essential modernizations for elevator operators. In December 2021, 4,500 lifts were found to have "dangerous defects" during legally required safety inspections.
• In 2018, approximately 100,000 elevators had not been tested. In Germany, elevators are required to be inspected annually, and following each TÜV inspection, a sticker identifying the following inspection date must be placed inside the elevator. In 2017, 1,965 elevators were closed, with the TÜV Association reporting that the total figure for Germany was 3,500.
• TÜV Rheinland had highlighted the growing threat of cyberattacks on elevator systems. The interconnected nature of modern elevator components and the ability to remotely manage these systems via the Internet makes them susceptible to malicious activities. Cyberattacks can lead to significant damage or malfunctions, posing safety risks and operational challenges. As of 2023, over half of German companies reported experiencing cyber-attacks within the past year, emphasizing the urgency of addressing cybersecurity in all sectors, including elevators. TÜV Rheinland recommends regular inspections to identify and mitigate potential vulnerabilities, ensuring the safety and reliability of elevator systems.

MARKET DRIVERS

• Germany's aging population propels the growth of the Germany elevator and escalator market in residential, hospitals, and elderly care facilities.
• The EIB's investments in various sectors indirectly support the elevator industry by stimulating construction projects and promoting modernization and digitalization, creating opportunities for elevator manufacturers.

INDUSTRY OPPORTUNITIES

• The Germany elevator and escalator market is transforming with digitization and AI, but cybersecurity concerns have emerged. Government initiatives support efficiency but require safeguards.
• The construction industry focuses on energy efficiency, with government initiatives targeting emission reduction. Elevators contribute to emissions in building construction, highlighting the need for sustainable technologies.

MARKET RESTRAINTS

• The German construction sector in 2024 will face heightened costs, a labor shortage, and reduced demand, worsened by fluctuating interest rates and geopolitical tensions.
• Rising expenses and sluggish growth will challenge the German construction market in 2023, affecting manufacturers in the elevator and escalator market. Factors such as increased material costs, disruptions in the supply chain, and geopolitical pressures will exacerbate the situation, leading to project delays and decreased demand for construction projects and equipment.

VENDOR LANDSCAPE

• The key players in the Germany elevator and escalator market are KONE, Otis, Mitsubishi Electric, Schindler, Fujitec, Schmitt Sohn Aufzüge TK Elevator, and Köhler.
• The top four prominent vendors in the German elevator and escalator market, KONE, Otis, TKE, and Schindler, account for 49% of the market share.

Recent Developments in the Germany Elevator and Escalator Market

• Schmersal Group, headquartered in Wuppertal, Germany, has restructured its service division to capitalize on growing demand. Their safety services, managed by tec.nicum, will expand significantly, emphasizing digitalization and holistic machine safety solutions. This move seeks to improve global coordination and utilize combined expertise. Formed as a subsidiary on April 8, tec.nicum incorporates Omnicon Engineering GmbH, acquired by Schmersal in 2019, with its headquarters in Kirkel-Limbach, Saarland, Southwest Germany.
• Meanwhile, Ziehl-Abegg, a German company specializing in electric elevator motors and other drive, ventilation, and control technology components, reported its most successful year in 2023. With a sales increase of approximately 9.5% to EUR 955 million (US$1 billion), the company achieved its best performance in history. Additionally, Ziehl-Abegg made significant investments to lay the foundation for sustainable global growth and structural realignment.