Over the past years, the European market for wood-based construction has been growing with accelerating pace amounting currently to about EUR 5 billion per year. With the growth at some 8% per annum, the market is projected to exceed EUR 10 billion per year by 2030.
The above figures and strong trends concern primarily multi-storey buildings based on such modern materials as cross laminated timber (CLT) and laminated veneer lumber (LVL) as well as glulam. In addition to multi-storey buildings, there is also a large market regarding detached houses, and also infrastructure building using wood, and is all wood-frame buildings were to be counted, the resulting market volume would be in fact clearly larger.
The trigger for the rapid development in the market has been in the technological breakthroughs of new engineered wood products (EWP), mostly CLT and LVL, which facilitate solid wood structures with strength comparable to steel and concrete and beyond.
The technology of CLT and LVL construction features potential for particular efficiency gains resulting, for example, from modular solutions and reduction of tailor-made in situ work (i.e. reduced building time), and enhancing productivity with learning-by-doing.
The versatility of the new engineered wood products aligns with flexible design and architecture with added value, replacing other construction materials in residential, office and public buildings as well as infrastructure uses (logistics, industrial and agricultural buildings). The design versatility includes also a scope for frontier energy systems, including solar (e.g. wall and roof structures) and geothermal solutions.
Wood is often perceived as a superior material by people living or working in wooden houses. The experience of a user, as well as several studies, refer to possible health benefits of wood, looking at both measured and perceived indoor environment quality.
Wood-based construction represents an important instrument to improve the lowish climate change status of the construction sector, which accounted for 39% of global greenhouse gas (GHG) emissions in 2018.
Well-established research suggests that 1 m³ of wood used in a building can store 0.9 tons of CO2 and substitute 1.1 tons of CO2, resulting in a total emission saving of 2 tons of CO2. As a rule of thumb, since 1 m³ of CLT equals to 4 floorspace m2, a 100 m2 apartment equals to 50 tons saving in CO2, which corresponds e.g. to (offsetting) a carbon footprint of 30 return flights between London(UK)/New York(US).
In addition to the impact on climate change mitigation and environmental sustainability, the societal impact of wood-based construction is bound to increase in importance in future. Driven by urbanization, the world’s building stock is expected to double by 2050. Within a wider framework of green building investment – including health and well-being perspectives – it is likely that wood will play a catalytic role when identifying hybrid construction solutions that incorporate various materials and technologies. Recyclability of wood will continue to form a critical benchmark when moving further towards circular bioeconomy.
In summary, the ongoing development of wood-based construction creates an attractive and expanding investment opportunity. Whilst the opportunity broadly maintains all well-established features of a real asset in terms of return and risk, there are also additional benefits of an impact investment type.
The acute interest by investors towards such benefits, coupled with definite technical parameters, do merit addressing the wood-based building as a specific real asset opportunity.
Cover: Selarchius Art Museum Gösta Pavillion, photo by Mikko Auerniitty, Designer / Manufacturer MX_SI Architectural studio ,
Arkkitehtitoimisto Huttunen – Lipasti – Pakkanen Oy
2nd from top: Sibelius Hall, photo by Mikko Auerniitty, Designer/Manufacturer Artto Palo Rossi Tikka Oy
3rd from top: Villa Riviera Summer House, photo by Jussi Tiainen