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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, 2020-2027

Region : Global | Format: PDF | Report ID: FBI101662

 

KEY MARKET INSIGHTS

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The global modular construction market size was valued at USD 67.74 billion in 2019 and is projected to reach USD 106.22 billion by 2027, exhibiting a CAGR of 5.9 % during the forecast period.

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 Modular building solutions are gaining popularity among housing giants owing to the various benefits that they offer 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 gap. This has resulted in the adoption of advanced manufacturing techniques.


COVID-19 to Impede the Opportunities for New Construction Activities


COVID-19 has caused considerable economic damage. Nationwide lockdowns have halted construction and impacted this hit labour-intensive sector as migrant workers leaving the labour colonies at construction sites is critically hampering construction activities across the world. As per the study of International labour Organization, in the COVID-19 pandemic nearly 52% of labour absenteeism is observed in Indian construction market. The recent emergence of COVID-19 pandemic has increased market uncertainty and volatility. It has led to the complete economic shutdown in India, China, the US, Italy, Israel, the UK, and other countries that has significantly affected businesses across industries. Moreover, the volatility in the stock market around the world has had an adverse impact on stock prices and trading volumes for manufacturers. This has resulted in significant decline in new residential and non-residential constructions that has shrunk the demand for this type of construction. Also, the commercial and residential construction projects are usually backed by financial institutions and investors. According to the European Investment Bank, approximately USD 13,300 million was invested in Europe for infrastructure development, environmental projects, SMEs and midcaps financing, etc. Owing to sudden outbreak of pandemic, the cash inflow-outflow ecosystem has been majorly hampered, resulting in low return on investments.


LATEST TRENDS


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Adoption of Lean Manufacturing Techniques to Propel Product Demand


Today, modular construction is one of the prominent industries seeking lean techniques in order to improve the overall operational workflows. Permanent modular construction (PMC) delivers sustainable construction, utilizing offsite manufacturing techniques to prefabricate single or multi-story buildings. This improves the operational performance and identifies and evaluates process improvement measures as well as 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 across the world are adopting innovative approaches including lean manufacturing and management, standardized project management (StP), building information modeling (BIM), etc. to revolutionize the industry.


DRIVING FACTORS


Increasing Infrastructure Investments in Fast Growing 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, rising investments in commercial spaces are 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 the leased area is estimated to be around 60 million sq. ft. according to secondary sources.


Evolving Government Initiatives to Drive the Market


Evolving government initiatives to reduce construction waste and promote green buildings is driving the 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 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 materials. In addition, increasing spending of governments on R&D for novel construction solutions is expected to drive the prefabricated construction market in the near future.


RESTRAINING FACTOR


Rising Offsite Manufacturing Investments & Financial Crisis Hinders the Market


Modular construction is strongly associated with offsite manufacturing that requires 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 as 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 creates pressure for the investment rate for further stage planning, hindering the overall market growth.


SEGMENTATION


By Type Analysis


Permanent Modular Construction Holds Major Market Share of the Market


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


Rising number of start-ups in developing economies is resulting in the growth of the commercial sector. According to our sources, India witnessed 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 cost and time efficiency with ease of installation is expected to result in the increased demand for modular units in the hospitality and education sector. The others regional segment is anticipated to exhibit stable growth with moderate demand of modular structures worldwide.


REGIONAL INSIGHTS


Asia Pacific Modular Construction Market Size, 2019 (USD Billion)

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Asia Pacific is expected to exhibit fastest growth in the market over the forecast period. Increasing construction activities owing to the rising demand from the residential and commercial sectors is expected to drive the regional market. Furthermore, increasing government initiatives to promote eco-friendly housing is resulting in the growth of demand for modular buildings.


Rising demand for modular engineering for construction in several sectors such as healthcare, education, and multi-family homes is expected to result in the growth of prefab 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 USA.


In Europe, 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 construction program and home building fund support innovators to develop land for housing, including modular projects. Also, the government has planned to achieve a 50% reduction in greenhouse gas emissions. It will thus result in the growth of the prefab construction market.


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 as a result of resistance to the adoption of modular housing.


KEY INDUSTRY PLAYERS


KEF Partners with Katerra to Bolster Market Position and Growth


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, 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 fulfill specific customer requirements. For instance, Blu Homes provides customized home styles, finishes, and layouts. According to sources, they provide 40% energy-efficient homes with advanced features including thermal type of 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:



  • November 2019: Katerra bagged a commercial project with Vaishnavi Group to build Vaishnavi Tech Square. The company will build 10 floors office spaces, with two basements floors and multi-level parking garage, spanning up to 521,400sqft, at Iballur Village, Bangalore.

  • June 2018: Lendlease and Starwood announced joint acquisition of The Silvertown Partnership. The acquisition will aid both the companies to management of projects owned by Silvertown, in a major area at London’s East End.


REPORT COVERAGE


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


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Report Scope & Segmentation








































 ATTRIBUTE



  DETAILS



Study Period



2016-2027



Base Year



2019



Forecast Period



2020-2027



Historical Period



2016-2018



Unit



Value (USD billion)



Segmentation



By Type



  • Permanent Modular Construction (PMC)

  • Relocatable Modular Construction



By Application



  • Commercial

  • Healthcare

  • Education & Institutional

  • Hospitality

  • Others (Residential, etc.)



By Region



  • North America (the U.S. and Canada)

  • Europe (U.K., Germany, France, Italy, Spain, and the Rest of Europe)

  • Asia Pacific (Japan, China, India, Australia, Southeast Asia, and the Rest of Asia Pacific)

  • The Middle East & Africa (South Africa, GCC, and the Rest of Middle East & Africa)

  • Latin America (Brazil, Mexico, and the Rest of Latin America)



Frequently Asked Questions

Fortune Business Insights says that the global modular construction market size was USD 67.74 billion in 2019 and is projected to reach USD 106.22 billion by 2027.

In 2019, the Asia Pacific market value stood at USD 21.02 billion.

Growing at a CAGR of 5.9%, the market will exhibit steady growth in the forecast period (2020-2027).

The permanent segment is expected to be the leading segment in this market during the forecast period.

Increasing infrastructure investments in developing economies and evolving government initiatives are major factors driving the growth of the market.

Skanska, Algeco, Katerra, and Bouygues Construction are the major players in the global market.

Asia Pacific dominated this market’s largest share in 2019.

Rising offsite manufacturing investments and financial crisis are expected to hinder the adoption of modular buildings.

Commercial application is expected to drive the adoption for this type of construction.

Modular Construction Market Size, Share and Global Industry Trend Forecast till 2026
  • Jul, 2020
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  • 2016-2018
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