The European wooden-construction sector is evolving rapidly, write Beata Rantaeskola, Olli Haltia and Miikka Pesonen

The European market for mass timber-based multi-storey buildings is growing at some 8% per year and is projected to grow from €5bn today to at least €10bn per year by 2030. Importantly, the development in wooden real estate is backed up by dynamic expansion of mass timber-construction material, especially engineered wood products (EWPS) such as cross-laminated timber (CLT), for which production capacity has been growing at 18% per year since 2013. 

The above figures concern primarily multi-storey buildings, where rapid development has been achieved based on EWPs such as CLT, laminated-veneer lumber (LVL) and glue-laminated timber (glulam). EWPs represent technological breakthroughs in materials and the facilitation of on-site modular construction. 

If other building types are added to multi-storey buildings, the resulting market volume would, of course, be even larger – not to mention if all the timber-frame buildings were to be considered as well.

The versatility of new EWPs adds value to the design and construction process. Wood is known for its health benefits, lowering residents’ stress levels and improving indoor environment air. The use of wood has also increased in building design for its aesthetic appeal. 

Essentially, wood has a low-carbon footprint and the ability to store carbon during a building’s lifetime. Well-established research suggests that 1m³ of wood used in a building can store 0.9 tonnes of CO₂ and substitute 1.1 tonnes of CO₂, resulting in a total emission saving of 2 tonnes of CO₂. Construction materials, referred to as embodied carbon, are increasingly becoming the focus of regulatory bodies. With 8% of global carbon emissions coming from cement production it is no surprise that wood-based construction is in demand and supported by policies to achieve EU zero-emission targets.

The Lighthouse, Finland, is an example of how new wood technologies are changing construction

The Lighthouse, Finland, is an example of how new wood technologies are changing construction

The amount of wooden construction projects and their size is growing. In Finland the total floor area of wooden apartments projects and office building projects is 10 times larger than 10 years ago, amounting to almost 600,000sqm between 2020 to 2024. This expansion is the result of the more projects and, more importantly, of a significant increase in project sizes. The average size of a project has more than doubled over the past 10 years, reaching more than 10,000sqm between 2020 to 2024, and continues to grow. 

Reflecting a trend in the market for wooden construction in the education, apartment and office building segments, regulatory changes in 2011 and 2018 have helped to facilitate supply – for example, in building houses with eight floors and more. In several European countries, similar regulatory reforms have been implemented or are being planned. The regulation also includes explicit targets for wooden (and other sustainable) construction material in the public sector – for example, the target is 45% in Finland by 2025 and 50% in France by 2022. 

The rapidly evolving demand for wood-based real estate is also supported by substantial expansion of the manufacturing capacity of EWPs. Stora Enso, a global leader in wood-based solutions is continuously expanding its CLT capacity in its production facilities in Sweden, Austria and the Czech Republic, in response to growing demand from real estate. Currently, a 18,900sqm office building – of which 5,000sqm is for the new Stora Enso headquarter – is being built in central Helsinki based on mass timber, especially CLT and LVL, produced by Stora Enso.

“Wood has a low-carbon footprint and the ability to store carbon during a building’s lifetime. Well-established research suggests that 1m³ of wood used in a building can store 0.9 tonnes of CO2

Globally, the development in the wooden real-estate is backed up by dynamic expansion of mass timber-construction materials such as CLT, for which production capacity has increased at an average 18% per year since 2013. The use of CLT is expected to continue growing rapidly and will almost triple by 2026.

Besides the substantial environmental benefits of reducing carbon emissions, wood-based real estate is ecologically sustainable. We estimate that the biological growth of European forests produces in a few days all wood that would be needed if all European residential apartment buildings were built based on timber. Merely 17 hours of biological growth in the European forests would be needed to reach a 10% market share for wood-based real estate – a reasonable first target.

Beata Rantaeskola is an analyst at Dasos Capital, Olli Haltia is a senior partner and CEO at Dasos Capital, and Miikka Pesonen is head of sales at Stora Enso Wood Products