Modular Construction Market Size, Share & COVID-19 impact Analysis, By Type (Permanent Modular Construction, and Relocatable Modular Construction), By Application (Commercial, Healthcare, Education & Institutional, Hospitality, and Others), and Regional Forecast, 2021-2028

The global modular construction market size was USD 72.11 billion in 2020 and is projected to grow from USD 75.89 billion in 2021 to USD 114.78 billion in 2028 at a CAGR of 6.1% during the 2021-2028 period. Based on our analysis, the modular construction market exhibited a modest growth of 5.2% in 2020 as compared to the average year-on-year growth during 2017-2019. The regional COVID-19 impact has been unprecedented and staggering, with modular construction witnessing a positive demand across the regions amid the pandemic. The sudden fall in CAGR is attributable to this market’s demand and growth returning to pre-pandemic levels once the pandemic is over.

Modular building solutions are gaining popularity among housing giants due to their various benefits, including reduced waste, speedy building, cost-effectiveness, eco-friendliness, and flexibility. As per industry experts, modular building projects can be completed 30% to 50% quicker than traditional construction. Modular buildings are extremely flexible owing to the custom-made fits that are created according to the specific requirements of customers. Rapid urbanization has given rise to infrastructure activities to bridge the rising demand and supply chain gap. GCC-based AMANA Investments is planning to launch a platform for seamless offsite construction under its brand DuPod, and DuBox, resulting in the adoption of advanced manufacturing techniques.

COVID-19 to Impede Opportunities for New Construction Activities Owing to Reduced Investments

COVID-19 has caused considerable economic damage. The nationwide lockdown globally has halted construction and impacted the labour-intensive sector. This is due to the migrant workers being stranded at construction sites, and the halted construction activities are hampering the growth prospects across the world. As per the International Labor Organization study, nearly 52% of labor absenteeism is observed in the Indian construction market, reducing the overall construction activities across the country. The emergence of the COVID-19 pandemic led to market uncertainty and volatility worldwide. Moreover, the stock market volatility worldwide has had an adverse impact on stock prices and trading volumes for manufacturers. This has resulted in a significant decline in new residential and non-residential constructions that has shrunk the demand for modular construction.

Financial institutions and investors usually back commercial and residential construction projects. According to the European Investment Bank, in 2018, approximately USD 13,300 million was invested in Europe for infrastructure development, environmental projects, SMEs and midcaps financing, etc.

LATEST TRENDS

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Adoption of Lean Manufacturing Techniques to Augment Product Demand

Today, modular construction is one of the prominent industries seeking lean techniques to improve overall operational workflows. Permanent modular construction (PMC) delivers sustainable construction, utilizing offsite manufacturing techniques to prefabricate single or multi-story buildings. This improves operational performance, identifies and evaluates process improvement measures, and improves the overall construction workflow. For instance, in May 2019, Skender launched a modular production building at its advanced manufacturing facility located in Chicago. Moreover, prominent key players worldwide adopt innovative approaches, including lean manufacturing and management, standardized project management (SPM), building information modeling (BIM), etc., to revolutionize the industry.

DRIVING FACTORS

Increasing Infrastructure Investments in Fast-growing Economies to Propel Growth

Due to the rise in industrialization and urbanization in developing economies such as India, Vietnam, and China, the increasing infrastructure investments are expected to drive the modular construction market growth. Besides, rising investments in commercial spaces are expected to contribute to the prefabricated construction market revenue positively. For instance, in India, commercial property leasing has witnessed a growth of 30% in the first quadrant of 2019. The leased area is estimated to be around 60 million sq. ft. according to secondary sources.

Evolving Government Initiatives to Promote Green Infrastructure will Aid Growth

Evolving government initiatives to reduce construction waste and promote green buildings is driving the market. For instance, the Government of Singapore has mandated using PPVC (prefabricated, pre-finished, volumetric construction) elements in numerous projects on government lands. Besides, the government provides companies with subsidies that are standardizing modern methods of construction. On 15^th March 2021, The Canadian Minister of Families and other members of Parliament announced the investment of CAD 16.4 million Rapid Housing Initiative allocation for the Surrey Centre by building 44 new affordable homes. The increasing spending on R&D activities for novel construction solutions is expected to drive the prefabricated construction market in the near future.

RESTRAINING FACTORS

Rising Offsite Manufacturing Investments & Financial Crisis May Hinder Growth

Modular construction is strongly associated with offsite manufacturing, requiring huge investments and long-term returns, with a need for stable market growth. Project pre-planning is one of the key restraints in the modularization process. It may lead to extensive planning of critical components such as coordination of design, onsite installation, and transportation. Hence, strategic project pre-planning increases manufacturing investments that create pressure for the investment rate for further stage planning, hindering the overall market growth rate.

SEGMENTATION

By Type Analysis

Permanent Modular Construction Segment to Hold Major Market Share

The type segment is bifurcated into permanent (PMC) and relocatable modular construction (RMC).

PMC holds the largest market share and is the fastest-growing segment. The PMC module can be retrofitted to the existing building or delivered as a turn-key solution with time and cost-efficiency.

RMC is expected to witness progressive growth as temporary housing for emergency and relief operations has gained importance over the past years. These buildings are specially designed to be reused and repurposed and to be transported to various project sites.

By Application Analysis

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Commercial Application to be the Fastest-growing Segment in Upcoming Years

By application, the global modular construction market is further segmented into commercial, healthcare, educational & institutional, hospitality, and others.

The rising number of start-ups in developing economies is resulting in the growth of the commercial sector with the largest market shares. According to our sources, India witnessed a 108% growth of start-up investments in 2018.

Healthcare providers are seeking prefab as a viable option owing to its characteristics such as cost efficiency, high quality, and time efficiency. They are using prefab for bathrooms, headwalls, and entire hospitals.

The reduced cost and time efficiency with ease of installation is likely to result in the increasing demand for modular units in the hospitality and education sector.

The others segment is anticipated to exhibit stable growth with moderate demand for modular structures worldwide.

REGIONAL INSIGHTS

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Asia-Pacific is expected to dominate the global market during the forecast period. This is attributed to the increasing construction activities owing to the rising demand from the residential and commercial sectors. Furthermore, proactive government initiatives to promote eco-friendly housing result in the growth of demand for modular buildings.

India to Witness the Highest CAGR with Rising Commercial Construction Sector

India is expected to witness the highest CAGR due to the rising construction projects across the commercial sector. Foreign Direct Investment (FDI) in the IT and telecommunications, healthcare, and automotive sector is the key factor surging the need for commercial spaces across the country. Moreover, with the aim of green building solutions, commercial modular type of construction is becoming the top priority among India's builders and investors.

The rising demand for modular engineering for construction in several sectors such as healthcare, education, and multi-family homes is expected to grow prefab construction in North America. Moreover, the general contractors in the U.S. are using modular structures for building superstructures and fulfilling electrical, plumbing, and mechanical requirements.

In Europe, supportive government initiatives in the U.K. are further expected to result in the growth of the market. For instance, the U.K. government's accelerated the construction programs and home building fund support innovators to develop land for housing, including modular projects, thus creating a positive impact regarding modular type of construction amongst the construction and fabrication providers and their clients. Also, the government has planned to achieve a 50% reduction in greenhouse gas emissions that will bode well for the implementation of green modular infrastructure.

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The Middle East & Africa is expected to exhibit significant growth over the forecast period owing to the increasing adoption of advanced technologies in the construction industry. Latin America is expected to observe sluggish growth due to resistance to the adoption of modular housing.

KEY INDUSTRY PLAYERS

Key Companies Focus on Acquisitions and Mergers to Intensify Competition

The key manufacturers in this market are focusing on mergers and acquisitions. For instance, KEF Katerra is a joint venture of Katerra and KEF Infra to enhance their capabilities, and offerings and expand their geographic reach. Furthermore, they are trying to find solutions to provide affordable and eco-friendly products. Besides, companies are focusing on energy-efficiency and customization to fulfill specific customer requirements. For instance, Red Sea Housing, Blu Homes provides customized home styles, finishes, and layouts. According to sources, they provide 40% energy-efficient homes with advanced features, including thermal insulation and eco-friendly water fixtures.

LIST OF KEY COMPANIES PROFILED:

• Guerdon Modular Buildings (Boise, Idaho)


• Laing O'Rourke (Dartford, United Kingdom)


• ATCO (Alberta, Canada)


• Red Sea International Company (Jeddah, Kingdom of Saudi Arabia)


• Bouygues Construction (Paris, France)


• VINCI Construction Grands Projets (Brentford, United Kingdom)


• Skanska AB (Stockholm, Sweden)


• Algeco (London, United Kingdom)


• KLEUSBERG GmbH & Co. KG (Wissen, Germany)


• Katerra (Menlo Park, California)


• Lendlease Corporation (Sydney, Australia)

KEY INDUSTRY DEVELOPMENTS:

• July 2021: Modulaire Group (earlier known as Algeco Group) announced the completion of the acquisition of Procomm Site Services Ltd . (a UK-based portable modular accommodation provider), with the aim to create a strong market presence across Europe.


• July 2021: Laing O’Rourke, ISG, Wates, and Kier have been appointed by the Ministry of Justice (MoJ) for building the Alliance 4 New Prisons (A4NP) worth £1billion, for male prisoners across UK while building 6,000 new, modern prisons with the aim of providing security, safety, and rehabilitation.


• March 2021: The Wolff Co. (a fully integrated Arizona-based real estate investment firm) partnered with Katerra to design a project of two buildings with five-story using cross-laminated timber (CLT) in North Seattle.

REPORT COVERAGE

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The global modular construction market report provides an in-depth analysis of the market dynamics and competitive landscape. It provides various key insights, including recent modular construction industry developments in the market, such as mergers & acquisitions, macro, and microeconomic factors, SWOT analysis, and company profiles.

Report Scope & Segmentation