The UK’s security equipment market (including alarms, CCTV and access control) is believed to have grown by 4% in nominal terms to £3.46 billion in 2015. Market drivers have included a buoyant service sector, increased business investment, and strengthening new build construction.

CCTV continued to demonstrate the strongest growth in 2015 at 5%, while access control sales increased by 4%, and integrated systems performed well with estimated growth of 4%. Intruder alarms are reported to have shown slowing growth to 3%, while the growth of central alarms fell to 2% as demand increasingly moved towards interconnected devices and more sophisticated technology-led products.

Figure 1: UK market for security equipment including sales and rental income*, 2011-15

(£ million)

Note: Market includes intruder alarms, CCTV, access control, integrated systems and central alarms

Source: MBD and trade estimates

CCTV accounted for 44% of the security alarms and systems market in 2015, with sales estimated to have reached £1.54 billion, boosted by new product innovations and business sector demand. Demand for features, such as remote access, is driving greater adoption of IP-based networked systems. The ability to integrate other applications, such as heating and lighting, onto a single networked system is also stimulating demand as the trend towards building management systems continues.

At an estimated 19% of the security equipment market, intruder alarm penetration remains low in existing housing stock, but is much more common in new build homes. However, a shift towards more integrated systems and low cost DIY security kits will continue to impact demand in the security alarms sector.

The access control market has been supported by improving macroeconomic conditions in 2015, holding 23% market share in that year. The market is benefiting from the gradual shift towards IP-based systems seen across the wider security industry. Sales have been boosted by more buoyant office construction activity, while hotel refurbishments have also been encouraged by the strengthening economy.

Figure 2: The UK market for security equipment, by product type, 2011-15

(£ million)

Note: Market value include sales and rental income

Source: MBD and trade estimates

The security equipment market is set to grow by an estimated 3% in real terms in 2016, taking value to £3.6 billion as a somewhat fragile economic recovery stimulates growth. This represents a slowdown from 2015, when growth was estimated at 4%. From 2016 to 2020, the CCTV segment is set to grow by an estimated 17% in real terms, alongside a 17% rise in integrated systems. While increased business investment points to improving business sentiment and greater investment in new and replacement security equipment, the economic recovery is still tentative. This could have long-term implications for the market.

Figure 3: Forecast UK market for security alarms and systems, 2016-20

(£ million at 2015 prices)

Source: MBD forecasts

Business investment continues to rise, reaching £76.8 billion in Q2 2015 - the highest level since the £75.8 billion in Q4 2007. This has created increasingly positive demand conditions across the security equipment market as companies are more able to invest in security equipment installation and upgrades.

Figure 4: Business investment in the UK (GFCF), 2011-15

(£ million seasonally adjusted)

Source: ONS Business Investment

Domestic burglaries, and arson and criminal damage, have risen for the first time in many years, by 1% and 2% respectively. Security manufacturers can use this growth to demonstrate the benefits of increased upgraded retro-fit home security, including CCTV cameras, to protect households alongside alarm systems. This is also a popular area for press coverage, making the perception of crime levels even stronger and more important than the reality. There will be additional opportunities for manufacturers to diversify their product range to include DIY home security systems.

Figure 5: Incidence of domestic crime, in England and Wales, 2011-15

(000 incidents)

Note: Data collected over year from April to March

Source: Crime Survey of England and Wales 2015

2015 has seen increased uptake of smart devices with multiple functions throughout the home. This trend is also evident in the security equipment market, with 32% of respondents to Mintel’s Device Integration and the Connected Home May 2015 report agreeing they would be interested in smart security cameras and surveillance equipment. This trend offers great potential for mid- to long-term growth prospects, particularly for systems that can connect with other home devices, such as smart switches to fridges, central heating controls, and lighting switches.

The number of outlets in the registered hotel accommodation sector climbed by 5% in 2015 to almost 21,000 across the UK. This represents the strongest growth rate seen by the sector over a five-year period.

Figure 6: Number of business premises in the UK, by select industry grouping, 2011-15

(Number of outlets)

Source: ONS Business, Size Activity and Location

The UK is one of the largest and most mature security product markets in Europe. The industry has become fragmented as technological advances and growth have encouraged companies to specialise in niche areas of the market, boosting the number of small companies in the industry.

Companies reported mixed performances, with some increasing turnover and recording strong growth, while others saw revenues decline amid continued difficult trading conditions. However, growth prospects for the long-term look positive, with many larger companies investing in product innovations and partnering with technology companies, while construction trends and the wider UK economic outlook are also trending upward.

The security equipment market is expected to continue growing in real terms, with both the business and residential sectors expanding. In the former sector, rising new build construction output and increased business investment levels will underpin growing sales.

Manufacturers will need to protect their position in relation to new entrants from the technology sector as penetration of wireless security systems increases, while product development is expected to continue at a rapid pace. The focus is likely to be on biometric applications in access control and wider commercial applications for CCTV. As integrated systems become more popular, the functionality of products will come into greater focus.