SAINT_GOBAIN_REGISTRATION_DOCUMENT_2017

One ambition: to improve the well-being of all Creating great living places

CREATING GREAT LIVING PLACES 2.

Trends in the construction market 2.1

2

Global prospects for the 2.1.1 construction market

Urban development and 2.1.2 sustainable construction

Saint-Gobain’s largest market, construction, offers considerable growth prospects worldwide on the 2030 horizon (1) . Construction volume is thus expected to increase by 85% by 2030, to achieving a total of $15,500 billion worldwide. China, the United States and India alone will represent over half the market value. With an annual growth rate of +3.9% projected over 2015-2030, the construction market will exceed annual global GDP growth by more than one percentage point. Chinese construction, affected by the slowing of economy and aging population, is expected to see its growth slow down over the 2030 horizon, while keeping its place as global market leader, which it has held since 2010. The Indian market is projected to grow twice as fast as China’s and is expected to overtake Japan in 2021 to become the world’s third-largest construction market. The need for infrastructure in emerging countries is also expected to continue growing, particularly in the African market. Among developed countries, the construction sector is expected to rebound after several years of crisis. The expected growth rates of construction in the United States over the next few years is approaching 5%, a figure close to growth estimates for the Chinese market. In Western Europe, the new construction market is not expected to regain its pre-crisis levels until 2025 (2) . This trend, however, will be compensated by the renovation market, which represented nearly 40%. In France alone, the renovation market (including improvement and maintenance) is thought to represent around €75 billion per year (3) . Currently, 75% of European buildings have been constructed before the implementation of energy efficiency standards (4) . Renovation will therefore be stimulated by increasing energy efficiency requirements, on the one hand, which are increasingly reflected in regulatory changes, and on the other hand, by increasing demand for comfort in buildings. In France, the energy transition law passed in July 2015 defines a framework favorable to the acceleration of energy renovation work in accordance with European provisions. The building energy renovation scheme announced by the French government in November 2017 should help to support French renovation in the short- to medium-term. Lastly, the construction is steering increasingly towards sustainable and environmentally friendly solutions and a more circular economy.

The building sector is engaged in an in-depth process of transformation, fostered particularly by increasingly demanding thermal regulations that enable the Group to promote and deploy its line of energy efficiency solutions (insulation glazing and thermal insulation solutions), in a context where buildings must reduce CO 2 emissions by 84 gigatons by 2050 to limit global warming to under +2°C. In recent years, a more global approach has emerged, incorporating not only energy aspects but also the other major challenges of sustainable development: sustainable construction. At each stage of its life cycle, a building designed, built or renovated and managed sustainably improves comfort and quality of life, limits the consumption of natural resources, reduces negative effects on the environment and increases value added for all stakeholders. This trend towards more sustainable construction is already clearly visible and is in particular reflected by rapid growth in the number of certified buildings throughout the world. As such, between April 2014 and August 2016, the number of square meters certified under LEED (Leadership in Energy and Environmental Design) rose from 280 million to 1,500 million. This development is also beginning to be reflected in state regulations and policies. This underlying trend offers the Group a major opportunity for differentiation based on its unique portfolio of innovative, sustainable solutions for the construction and renovation markets that promote the development of energy-efficient, comfortable, healthy and attractive buildings, and conserve natural resources. There are two pillars to Saint-Gobain’s strategy for meeting the collective challenges of sustainable construction: promoting sustainable construction so that it becomes „ standard practice for the sector. To achieve this, the Group strives to lead by example, engaging with other leaders in the sector to speed up its transformation; developing and distributing sustainable solutions so that „ the Group can realize the full potential of the growth in the sustainable construction market. This calls for innovation and for management of the product portfolio, the circular economy, information and training for players in the market (see Chapter 2, Section 2.4).

Global Construction 2030, Global Construction Perspectives & Oxford Economics, 2015. (1) Global Construction 2030, Global Construction Perspectives & Oxford Economics, 2015. (2) Club de l’Amélioration de l’Habitat – report on the renovation market, 2017. (3) RESIDE: Boosting innovation in the European building Refurbishment sector through roadmaps for demand SIDE policy measures, 2015. (4)

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