Autoclaved Aerated Concrete Market

Market Overview

The global autoclaved aerated concrete market size was valued at USD 16.2 billion in 2022. It is projected to reach USD 29.71 billion by 2031, growing at a CAGR of 7.12% during the forecast period (2023-2031). 

Autoclaved aerated concrete is a versatile, lightweight construction material as it contains lots of closed air pockets and is usually used as blocks. It is precast concrete made with fine aggregates, cement, and an expanding agent that is responsible for making the mixture like bread dough. Advantages of AAC include thermal insulation & structural capability, design & construction flexibility, increased durability & dimensional stability, excellent fire resistance, high sound reduction, and others. AAC offers thermal and acoustic insulation, providing better safety and lower energy cost of heating or cooling. As AAC can easily cut into any required shape, it is possible virtually to construct an entire house with AAC, including walls, and floors, using reinforced aircrete beams, ceilings, and the roof.

The swiftly growing building and construction sector, owing to government initiatives promoting construction, majorly drive the growth of the Autoclaved Aerated Concrete Market. For instance, an initiative by the Government of India, the National Housing Bank (NHB), announced the setting up of the Affordable Housing Fund for the middle-class population at a low cost. Additionally, enhanced features of AAC, such as energy efficiency, acoustic properties, durability, and simultaneously provide structure, insulation, and fire- and mold resistance. This makes them an ideal choice of material for contractors and developers. Furthermore, advantages over traditional materials, low logistics, and strict government regulation towards construction have boosted the growth of the market. Increasing spending on construction and financial benefits offered by AAC is expected to fuel the growth of the market.

Market Dynamics

Market Drivers

Growing Urbanization and Need for Faster Construction

Rapid urbanization and increasing demand for cost-effective construction is expected to drive the market. Construction activities are on the surge in developing countries due to which the need for faster construction is increasing. The use of autoclaved aerated concrete blocks allows for much faster construction. The blocks are larger and have fewer joints than non-autoclaved aerated concrete blocks, making them easier to handle and resulting in faster completion times. Aerated concrete blocks are also easier to handle than other types of blocks, and drills and saws can easily cut through them to make them the size and shape needed to fit a specific location.

Cost Savings in Construction with Autoclaved Aerated Concrete

Autoclaved aerated concrete blocks weigh significantly less than traditional concrete blocks; they require less steel and concrete to hold them in place. Using AAC blocks saves up to 20% on steel and concrete reinforcement. This is due to its lightweight characteristic, which reduces the dead load of the building and consequently reduces the need for steel reinforcement by up to 20% when compared to red bricks. Mortar usage is lowered due to the enormous size of AAC Blocks compared to red bricks, which reduces the number of joints by 65% and thus the use of mortar by 60%. Plaster usage is reduced as a result of AAC Blocks because AAC comes in precise and accurate dimensions, unlike red bricks, and thus the blocks, after installation, offer the wall without any undulation. As a result, a thin layer of plaster is sufficient to plaster the wall. This reduces the cost of plastering by approximately 35%. The cost-saving benefits involved with autoclaved aerated concrete will increase its adoption in developing countries and government-assisted residential projects worldwide, contributing heavily to the growth of the market.

Market Restraint

High Cost of Manufacturing Autoclaved Aerated Concrete

Autoclave aerated concrete requires very expensive equipment, as well as a lot of energy and huge manufacturing facilities. As a result, low-volume block production is not economically viable. This is the most significant disadvantage of autoclaved aerated concrete. Small-scale manufacturers are at a disadvantage in manufacturing AAC blocks, as the profits from the production will be very low, and it will take a lot of time to reach the break-even point of their business. Therefore, these factors can restrain the growth of autoclaved aerated concrete, especially in underdeveloped and developing countries.

Market Opportunities

Government Initiatives Promoting Autoclaved Aerated Concrete

Governments worldwide are promoting the use of AAC blocks for the construction of several housing projects. AAC blocks are eco-friendly due to their non-toxic, recyclable, reusable, and renewable properties, due to which governments are promoting the use of autoclaved aerated concrete. AAC Block complements project management in terms of speed, consistency, and quality of construction, in addition to its adherent benefits. Key factors such as the Indian government's initiative to use eco-friendly construction materials as part of its net-zero carbon emission mission are driving AAC market growth. The Indian government's 'Housing for All by 2024' initiative, as well as projects such as Pradhan Mantri Awas Yojana, Police Housing, Kanya Shiksha Parishar, and others, are major game changers for the industry. Demand for autoclaved aerated concrete is anticipated to increase as regional government projects and the real-estate industry expand.

Regional Analysis

Asia Pacific Dominates the Global Market

The global autoclaved aerated concrete market is bifurcated into four regions, namely North America, Europe, Asia-Pacific, and LAMEA.

Asia Pacific is the most significant shareholder in the global market and is expected to grow at a CAGR of XX% during the forecast period. The larger share is linked with the rapid growth in urban regions and expanding real estate sector in China and India. The Indian government is investing USD 1.3 trillion in housing projects to construct 60 million new homes under the 'Pradhan-Mantri Awas Yojana- Gramin Program till March 2024. The Chinese government has unveiled massive construction plans, including plans for the relocation of 250 million people to new megacities over the next ten years. According to the National Bureau of Statistics of China, China's residential property sector has been rapidly expanding in terms of both sales and investments. With the growing consumer electronics and construction industries, the demand for AAC is expected to rise in the coming years. Rising demand for autoclaved aerated concrete from China's construction sector, the country's rapid industrialization, the easy availability of raw materials, and the presence of cheap labor are all expected to drive market growth in the region. 

The North American autoclaved aerated concrete market is estimated to expand at a steady pace during the forecast period. Factors attributed to the steady growth of the market include a rising number of manufacturing facilities and a high preference for sustainable construction across the region. Moreover, the establishment of state councils in several regions by the World Green Building Council (WGBC) and auxiliary activities by the administration to encourage green building construction are estimated to propel the AAC market in North America. Market players are utilizing a variety of strategies to boost revenue opportunities. The presence of some key players in the USA is due to rapid profitability. Furthermore, rising investments in technological developments in AAC-producing companies are fueling the growth of the AAC market.

Europe is expected to witness potential growth in the global market owing to the presence of local AAC manufacturing plants across Europe, with countries including the U.K., Germany, Poland, and Russia. Huge demand from the commercial sector and various business incentives offered by legislative bodies has led the market to grow in Europe during the forecast period. There are numerous advantages to using AAC in the construction industry, including energy efficiency, sustainability, and cost saving. Government policies, such as the European Union's (EU) goal of reducing energy demand in building stock by 80% by 2050, are anticipated to drive the market for autoclaved aerated concrete over the forecasted period.

The LAMEA region is expected to have steady growth owing to the need for better infrastructural and commercial development activities in UAE and Saudi Arabia. The rapid construction activities occurring in the oil-rich countries of the Middle East will contribute heavily to the growth of the autoclaved aerated concrete market share. Improvement in the economic condition and rising income per capita will increase the construction activities in South America and help in the growth of the market in the region.

Segmental Analysis

The global autoclaved aerated concrete market is segmented into product and application.

Based on product, the global market is bifurcated into blocks, beams & lintels, cladding panels, wall panels, roof panels, floor elements, and others.

The blocks segment is the highest contributor to the market and is expected to grow at a CAGR of xx% during the forecast period due to its various benefits in construction. AAC blocks are being used in the construction industry all over the world, acting as a ware material and meeting the needs of social, modern, and business divisions. Because of their low cost, adaptability, and speed of development, autoclaved aerated concrete blocks are in high demand. Furthermore, demand for autoclaved aerated concrete blocks is expected to rise during the forecast period. Autoclaved aerated concrete panels are reinforced and intended for use as floors and walls in multi-family, commercial, residential, and industrial buildings. Autoclaved aerated concrete blocks are ideal for high-rise buildings, pavement construction, and railroad bridge construction due to their quick and easy installation and high thermal efficiency. As a result, the demand for AAC blocks in residential construction is increasing. Furthermore, because of their high stability and constructive factors, such as being lightweight, environmentally friendly, and easily reusability, these blocks are one of the most preferred construction materials.

The wall panel segment is expected to grow at a higher CAGR, owing to its requirement for low-cost housing and faster construction for economically weaker sections of society. The AAC wall panel reduces the need for wet work for wall construction, reduces the cost of construction, and helps in faster construction with greater strength. The wall panels provide good strength and fire resistance, and easier to construct walls rapidly for houses and emergency hospitals in case of pandemic or major accidents.

Based on application, the global market is bifurcated into residential, commercial, and industrial.

The commercial segment is the highest contributor to the market and is expected to grow at a CAGR of xx% during the forecast period. Manufacturers of AAC building materials are implementing new strategies to broaden their geographic coverage and improve their product lines in the Autoclaved Aerated Concrete Market. In addition, the growing demand for sustainable materials to conserve the environment is driving the market growth. AAC's use in commercial construction is expected to remain high in the coming years due to its superior properties over traditional concrete, such as high tensile strength, a greater degree of compression, and ease of machinability.

Companies' commercial buildings and co-working spaces are expanding rapidly in developing countries. Business hub areas in metro cities around the world provide commercial space to companies and start-ups. Autoclaved aerated concrete is used in commercial construction because of its thermally insulated and energy-efficient properties, as well as being fire-resistant, termite- or pest-resistant, seismic-resistant, lightweight, sustainable, and quick and easy to apply. This has resulted in the expansion of the autoclaved aerated concrete industry.

The residential segment is expected to grow at a higher CAGR due to increasing housing projects subsidized by governments worldwide to provide shelter for its economically weaker section, with the increase in people moving from rural regions to urban regions in search of better jobs and higher income in developing countries. The demand for a house constructed with cheaper material that provides higher strength is increasing in urban regions, due to which the residential segment is expected to grow and contribute to the growth of the gloabal market.

Recent Developments

• June 2022, Xella Group, a leading building material provider from Europe, sold its insulation business URSA to Etex.
• February 2022, BigBloc Construction has decided to expand its manufacturing capacity by installing a Greenfield project of AAC blocks in Maharashtra, India.