Growth opportunities in the global modular and prefabricated buildings market look robust over the next six years.
A global uptick in construction activities and significant cost, labour, and time savings in offsite construction are key factors driving market revenues toward $215billion by 2025.
With a constantly evolving regulatory landscape, adopting more environmentally sustainable and regulatory-compliant construction practices will boost prospects and revenues in the more mature markets of Western Europe and North America.
Market research company Frost & Sullivan expects the market to expand at a sturdy CAGR of 6.3% until 2025.
“Despite increased construction costs from an off-site construction, a net saving of up to 7% is possible because of shortened construction periods,” said Prathmesh Limaye, senior analyst, chemicals and materials in infrastructure and mobility for Frost & Sullivan.
“In addition, prefabricated buildings are increasingly being perceived as sustainable solutions for construction projects due to a growing usage of materials, such as timber and aluminium composites, that are more energy efficient than concrete.”
From a regional perspective, the recovering economies of Latin America along with high-growth markets of Eastern Europe, India, and Southeast Asia are expected to provide lucrative market opportunities.
Slower growth is anticipated in North America and Europe due to increased construction activities in developing regions.
From a competitor position, the market is highly fragmented, with several regional and smaller suppliers having wide market coverage due to the relative ease of setting up a business in this space.
The industry is, therefore, slated to experience consolidation with multiple merger and acquisition activities occurring in the foreseeable future.
“Many small and regional participants influence the overall pricing and distribution patterns in regional markets, especially in Latin America, the Middle East, and Asia-Pacific,” said Limaye.
To gain a competitive advantage, Limaye recommends players emulate innovative companies such as Katerra and Welement, and adopt automation and design tools to increase the quality and precision in their construction.
Additional growth opportunities participants should aim to secure include manufacturers promoting more cost-effective and environmentally sustainable solutions that are compliant with regulations mandated by international organisations; gaining wider coverage by improving their portfolios with products that can be customised to end-user specifications; and promoting ease of installation.
Additionally they should look to expand operations into high-growth regions such as Asia-Pacific due to the region’s growing infrastructure and construction development; and offer products that are comparative with those offered by regional and local manufacturers.
But Limaye warned: “Despite significant market expansion prospects, perceptions surrounding the high initial cost of construction and transportation, design rigidity, multiple stakeholder involvement, and lack of skilled labour are key factors slowing adoption rates and hindering market growth.”
Meanwhile, the UAE prefabricated building and structural steel market specifically is expected to grow at a CAGR of 7.2% until 2024, reaching a value of $1.4bn.
A Business Wire report stated: “One of the major factors driving the UAE prefabricated building and structural steel market is the development of a general Construction Index in the country, which aims to encourage the adoption of advanced methods of construction using prefabricated components.
“These methods reduce time as well as the number of unskilled labourers required for the construction process.”
Aside from the reduction in time to complete projects, prefabrication methods of working also help top eliminate errors that may otherwise push back delivery time and hamper the bottom line.
“The usage of prefabricated building solutions also helps in lowering human errors and the overall costs of the project while decreasing construction debris and pollutants,” the report added.
“Apart from this, as prefabricated components are manufactured using advanced technologies with controlled quality specifications, they help in extending the average lifespan of the buildings.”