I have done this arrangement for my previous house's down stair bath. This arrangement requires some hacking of the existing wall tiles and additional piping work. Basically what I did was to hack and connect out the section between the stop cock & the shower outlet.
The water after the stop cock will go into the instant heater's inlet (cold) and then the instant heater's outlet (hot) will connect back to the existing pipe and water will come out from the shower head above.
You can control the water using either the stop cock (ex) or the stop cock on the heater.

For my current ground floor bath, I decided not to do any hacking. Thus I am using the adjustable shower directly from the water heater. Water is still control from the ex stop cock.

Which method are you referring to?
Anyway, both methods cost very minimal for me. Most of the connection works DIY.

Hacking and reinstate wall tiles get tiler to do la...
Install water heater and the piping reconnection can DIY what.... not rocket science...

Do you have spare tiles?

What I did was to hack the tiles and make the modification to the piping. Then get the tiler to reinstate the wall tiles.
BTW, I am not using the cold & hot mixer for this bathroom.

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Added on November 2, 2011, 8:30 am
It is to be expected to have the tiles with some slight colour variation. It will depends on how particular on this. 
If you can get the right plumber, he may be able to reinstate the few pieces of wall tiles for you. You have to source for the tiles yourself.

Grinder + diamond cutter blade, + rotary hammer. If you want to do it fast. And some cement skill, maybe tiling skill if you want to try.

If you don't have the tool, a metal chisel and mid size hammer with lots of patient. I did that to hide my current room a/c wires.

There is another alternative which does not require the hack the existing wall tiles.
However, you will need to accept the fact of having an exposed piping. This way, all you need is to install the install water heater and make the connections. Can be easily done DIY or get the shop selling you the water heater to install for you.

In that case, just get a plumber to reroute the necessary piping. He will hack the necessary wall tiles.
Then get the tiler to replace the wall tiles.

If you place is quite new, should be able to get the wall tiles.

The work is not much. Plumbing work is just a few hours. Maybe plumber will charge for one day's work.
Tiler's work also not much. Maybe charge also one day's work.
The problem is to get them to do these work. It is now towards the end of year. Most of them will be hard press to finish their work on hand. So, may be reluctant to take on minor jobs.
If you managed to get any, they may change extra....
Anyway, where is your place located? Klang valley?

anybody who done this setup whr instant heater with conceal piping for the rain shower head, do u face any drop in water pressure?

isit sufficient pressure for the rain shower head without any external water pump?

have anyone done this together with an additional hand shower?

this is what im planning to do.. to conceal inlet & outlet piping of the water heater.. got few questions:

1) does the outlet portion need to be replaced with copper piping?

2) usually the water heater pump will stop if to water flowing right? coz i will use main stop cock only.

3) do i need to place the water heater unit higher than shower head?