China's goliath elevator market may never again scale its recent peaks as the country's high-rise urban environments reach a state of maturity.
While China currently accounts for two-thirds of global elevator sales, Otis Elevator president Philippe Delpech said the country’s slowing rate of urbanisation as well as excess residential property construction will likely lead to a permanent sales decline in the near future.
Delpech has said that sales in the Chinese market are expected to fall to roughly half a million this year from a peak of 600,000 units last year, and is unlikely to scale such lofty heights again in future.
He said the contraction of Chinese elevator demand will have stark implications for global manufacturers given the importance of its market.
“We will have to adjust the output of the factories to the market,” he told Bloomberg. “You will have a consolidation in the market and some small companies will disappear.”
Delpech, head of the company that produce elevators for the Eiffel Tower and Empire State Building, believes the intense spate of high-rise construction in China’s marquee cities has reached its terminus as these urban environments reach maturity, and demand can only dwindle in the future.
“It’s like when they built New York up over 20 to 30 years. They delivered more elevators than they will ever deliver again,” he said. “It’s kind of that type of construction.”
The Otis Elevator head issued his dire prognostication just as analysts make similar forecasts of their own based on the state of China’s property and construction markets.
Bloomberg Intelligence sees easing of Chinese demand as the “largest threat facing elevator makers,” pointing in particular to a slowdown in both China’s overall economy and its real estate sector in particular, where government stimulus is propping up flagging growth.