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The global modular construction market size valued at USD 64.85 Billion in 2018 and is projected to reach USD 107.21 Billion by 2026, exhibiting a CAGR of 6.5% during the forecast period.
The modular construction market is gaining popularity among the construction giants owing to the various benefits that it possesses, including reduced waste, speedy building, cost-effectiveness, eco-friendliness, and flexibility. According to experts, modular building projects can be completed 30% to 50% more quicker than traditional construction. The modular construction has minimal impact on a particular business and keeps it running smoothly as more than 80% of the construction is performed offsite. Modular buildings are extremely flexible owing to the custom made fit that are created according to the specific requirements of customers.
Furthermore, the construction of modular units offsite under a controlled environment offers consistency in construction. In addition, modular construction significantly reduces onsite labor requirements, thus resulting in substantial cost savings.
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Construction industry has observed significant change over the past few years owing to the technological advances. Rising demand and supply gap in the construction sector owing to increasing urbanization has resulted in the adoption of advanced manufacturing techniques in the construction industry. Thus, modular construction is gaining popularity as a smart construction technology among the customers. For instance, U.K. is facing a housing crisis owing to the lack of skilled labor. Also, the uncertainty about Brexit is resulting in several difficulties in achieving the government initiative of building 3,00,000 houses per year. Prefab construction is readily addressing this problem and has witnessed a steady growth in U.K.
“Increasing Infrastructure Investments in Developing Economies to Propel the Market”
Increasing infrastructure investments owing to the rise in industrialization and urbanization in developing economies, such as India, Vietnam, and China are expected to drive the modular construction market growth. Besides, the rising investment in commercial spaces is expected to positively contribute to the prefabricated construction market revenue. For instance, in India, commercial property leasing has witnessed a growth of 30% in the first quadrant of 2019, and it is estimated to be around 60 million sq. ft. according to the sources. Moreover, ease of installation and affordable housing are further driving the prefab construction market demand. China is expected to lead the modular industry owing to the increasing demand for prefabricated housing from all over the world. For instance, the Hope on Alvarado is an affordable housing project by HBG Steel, KTGY Architecture + Planning, and Aedis Real Estate Group in L.A. This project is slated to open by 2020 and has steel modules specially sourced from China.
“Evolving Government Initiatives is Expected to Drive the Modular Construction Market”
Evolving government initiatives to reduce construction waste and promote green buildings is driving the modular construction market. For instance, the government of Singapore has mandated the use of PPVC (prefabricated, pre-finished, volumetric construction) elements in numerous projects on government lands. In addition, the Singapore government provides companies with subsidies that are standardizing the modern methods of construction. In 2016, the state council of China released a circular stating that 30% of the new buildings would utilize prefabricated construction. In addition, the increasing spending of governments on R&D for modular construction is expected to drive the prefabricated construction market in the near future. For instance, in 2019, Australia’s Minister for industry, science, and technology announced that Australia would spend USD 2 Million for a collaborative lab to help manufacturers design innovative, cost-effective, and eco-friendly prefabricated buildings.
“Permanent Modular Construction Holds Major Market Share of Modular Construction”
Based on type, the modular construction market is segmented into permanent and relocatable modular construction.
Permanent modular construction holds the largest market share and is the fastest-growing segment of the market. The Permanent modular construction (PMC) module can be retrofitted to the existing building or can be delivered as a turn-key solution with time and cost-efficiency. Increasing demand from the residential sector is expected to drive the growth of the permanent modular construction market. Identical specification requirements of the customers with faster occupancy and short timelines for hotels and dormitories are expected to drive the permanent modular construction sector. For instance, Courtyard by Marriott and TownPlace Suites in California were constructed by Lusardi Construction Company and Guerdon Modular Buildings in 2018. Additionally, PMC are primarily utilized in various medical facilities, such as clinics, hospitals, and surgical centers.
Relocated modular buildings are gaining popularity among applications, including educational institutes for temporary classrooms and university campus additions. Furthermore, the rise in demand from corporate infrastructure is expected to result in the growth of prefabricated construction market. 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. The ease of relocation, built, cost-effective configuration, flexibility, and faster delivery are expected to drive the relocation modular construction market growth. Thus, the need for relocation, speed, and temporary space are expected to increase the perfab construction market size.
“Healthcare Application is Expected to Show Significant Growth in the Market”
Based on application, the modular construction is segmented into commercial, hospitality, healthcare, education & institutions, and others (residential, religious buildings and etc.)
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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. Prefabrication has grown significantly over the past few years. According to the sources, around 49% of modular construction takes place in the healthcare sector. Increasing healthcare expenditure by different countries is further expected to result in the rise of prefab hospitals. For instance, the U.S. per capita health spending is around USD 12,000, and it is expected to exhibit growth over the forecast year.
“Commercial Application is Expected to be the Fastest Growing Segment in the Modular Construction Market”
Rising number of start-ups in the developing economies are resulting in the growth of the commercial sector. According to our sources, India witnessed 108% growth of start-up investments in 2018, where the total funding was USD 4.2 Billion from USD 2 Billion in 2017. Furthermore, the increasing popularity of co-working space is expected to drive the modular construction. For instance, according to the sources, in 2018, the co-working spaces observed 16% growth in the U.S. Thus, the flexible workspace is emerging as one of the prefabricated construction market trends and it is expected to result in the growth of commercial spaces in the near future.
“Prefab Housing to Exhibit Significant Growth in the Modular Construction Market”
Increasing development of prefab manufacturers in Asia Pacific, owing to the international collaborations, is expected to drive the prefabricated construction market. For instance, the Your Housing Group signed a deal of USD 2.77 Billion with China National Building Material Company for prefab housing developments. This project involves more than 25,000 homes that will be constructed in the next five years to resolve the housing crisis. In addition, the project would provide cross-nation infrastructure and training for future modular construction projects. As a part of this venture, 1000 factories will be built in the U.K. by the China National Building Material Company. Increasing demand for Asia Pacific prefab housing from several countries across the globe is anticipated to drive the prefab housing market. For instance, Ecotech Homes has supplied more than 60 prefab houses for the New Zealand government's massive housing project, Kiwi Build.
The cost and time efficiency with ease of installation is expected to result in the increased demand for modular construction in the hospitality industry.
Based on geography, the scope of study is segmented into five major regions, such as North America, Europe, Asia Pacific, the Middle East & Africa, and Latin America, which is further drilled down into countries.
Asia Pacific is expected to exhibit fastest growth in the modular construction market over the forecast period. Increasing construction activities owing to the rising demand from the residential and commercial sector is expected to drive this market in Asia Pacific. Furthermore, increasing government initiatives to promote eco-friendly housing is resulting in the growth of market revenue. For instance, the Singapore government housing projects have the mandate to use prefabricated modules. Furthermore, subsidies provided by the government are expected to increase the popularity of prefab construction.
Europe is expected to witness lucrative growth owing to the increasing demand in U.K. for the prefabricated modular buildings. The government initiatives in U.K. are further expected to result in the growth of the modular construction market. For instance, the U.K. government's accelerated construction programme and home building fund support innovators to develop land for housing, including modular projects. Moreover, the government of U.K. has planned to achieve a 50% reduction in greenhouse gas emissions. It will thus, result in the growth of the prefab construction market.
Asia Pacific Modular Construction Market Share, 2018 (USD Billion)
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Rising modular construction in industries such as healthcare, education, and multi-family homes is expected to result in the growth of modular construction in the U.S. Moreover, the general contractors in the U.S. are using modular structures for building superstructures and fulfilling electrical, plumbing, and mechanical requirements. According to sources, more than 69% of the general contractors use modular components in northeast of the U.S. The increasing construction in the hospitality sector is further expected to drive the modular construction market. For instance, the hotel chain Marriot is planning to open the worlds’ tallest modular hotel in New York city by the end of 2020.
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. For instance, in 2019, the Red Sea Development Company started to adopt prefabricated construction in Saudi Arabia’s The Red Sea Project. Latin America is expected to observe sluggish growth as a result of resistance to the adoption of modular housing.
“Leading Players such as Katerra, and Bouygues Construction are Focusing on Mergers and Acquisition to Enhance their Product Portfolio”
The key manufacturers are focusing on mergers and acquisitions. For instance, KEF Katerra is a joint venture of Katerra and KEF Infra to enhance their capabilities, offerings, and expand their geographic reach. Furthermore, they are trying to find solutions to provide affordable and eco-friendly products. In addition, companies are focusing on energy efficiency and customization to fulfil specific customer requirements. For instance, Blu Homes provides customised home styles, finishes, and layouts. According to the sources, they provide 40% energy-efficient homes with advanced features including thermal insulation and eco-friendly water fixtures.
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The report provides an in-depth analysis of the modular construction market dynamics and competitive landscape. It provides various key insights including recent industry developments in the modular construction market, such as mergers & acquisitions, macro and microeconomic factors, SWOT analysis, and company profiles.
Value (USD Billion)
In 2018, the global modular construction market was valued at USD 64.85 Billion.
In 2026, the global modular construction market is expected to reach USD 107.21 Billion.
The global modular construction market is projected to grow at a compound annual growth rate (CAGR) of 6.5% during the forecast period (2019-2026)
Permanent modular construction segment is expected to lead the modular construction market owing to the increasing demand from the hospitality and residential sector.
Increasing infrastructure in developing economies and rising government initiatives are the key factors that are driving the modular construction market
Laing ORourke, ATCO, Red Sea International Company, Bouygues Construction, VINCI Construction Grands Projets, Skanska AB, Algeco, KLEUSBERG GmbH & Co. KG, Katerra, Lendlease Corporation, and Guerdon Modular Buildings are the few leading companies in the global modular construction market.
Asia Pacific is expected to hold the highest CAGR in the modular construction market owing to the increasing construction activities in various verticals, such as industrial, commercial and residential.
The tailored prefab projects in housing, hospitality, and commercial sector with cost and energy efficiency are the modular construction market trends.
The supply-demand gap in the U.K. for housing has significantly increased over the past few years. Thus, to overcome the housing crisis, the U.K. is adopting modular construction. Furthermore, the increasing government regulations regarding greenhouse gas reduction is also expected to result in the growth of modular construction market.