The modular construction market is estimated to be valued at US$ 84.48 Bn in 2023 and is expected to exhibit a CAGR of 6.5% over the forecast period from 2023 to 2030, as highlighted in a new report published by Coherent Market Insights.
Modular construction refers to a process in which a building is constructed or assembled using prefabricated modular building components. These modular components are manufactured away from the construction site and are then transported and assembled onsite. Modular construction offers various advantages such as cost-effectiveness, time efficiency, fewer errors, and less waste during construction. The products in the modular construction market include portable and transportable buildings.
The modular construction market is expected to witness high growth owing to two major drivers – increasing demand for cost-effective and time-efficient construction methods and governmental support and initiatives for modular construction projects across major economies. Modular construction significantly reduces construction times as most of the components are prefabricated in a controlled factory environment. According to a National Association of Home Builders survey, modular construction can reduce construction time by 30-50% compared to traditional construction. Governments across countries are also promoting modular construction through various initiatives to meet the rising demand for infrastructure development projects. For instance, the Indian government has allocated Rs 100,000 crore for development of affordable houses using prefabricated and precast modular construction methods under its Pradhan Mantri Awas Yojana scheme.
The demand for modular construction is also driven by its advantages such as reduced construction waste, minimal site disruptions, improved quality control, all weather construction, and worker safety. Additionally, the growing construction industry worldwide on account of rapid urbanization is creating opportunities for modular construction market. However, transportation restrictions for oversized modular components and lack of flexibility in design and customization are some of the factors challenging the growth of this market.
Strength: Modular construction allows 30-50% faster construction than on-site building, reduces construction waste by up to 80%, and offers high durability. It provides customizable, flexible, and movable interior spaces. Workers have better safety and improved working conditions in a controlled factory environment.
Weakness: Modular construction requires high initial investments in machinery, tooling, and factory setup. Transportation and installation of modules also increase project costs. Standard module sizes and joinery methods may limit design flexibility for some complex projects.
Opportunity: Growth in infrastructure projects like roads, bridges, and utilities drive demand. Rapid urbanization in developing nations increases needs for affordable housing and commercial buildings. stricter environmental laws favor off-site construction methods.
Threats: Slow overall economic growth during recessions decreases spending on new projects. Rising material prices especially for steel and lumber increase modular building costs. Stricter transportation regulations pose challenges for module movement.
The global Modular Construction Market Share is expected to witness high growth, exhibiting CAGR of 6.5% over the forecast period, due to increasing government support for off-site construction through funding and regulations. Rapid urbanization and shortage of affordable housing especially in developing Asian countries boosts modular building uptake.
Regional analysis – North America dominates currently due to early adoption in the US. However, Asia Pacific is growing fastest due to large-scale investments in infrastructure and real estate in China, India. Middle Eastern countries are also emerging markets driven by economic diversification away from oil.
Key players operating in the modular construction market are Guerdon Modular Buildings (U.S.),Laing O’Rourke (U.K.),ATCO (Canada),Red Sea International Company (Saudi Arabia),Bouygues Construction (France),VINCI Construction Grands Projets (U.K.),Skanska AB (Sweden),Algeco (U.K.),KLEUSBERG GmbH & Co. KG (Germany),Katerra (U.S.),Lendlease Corporation (Australia). These leading modular builders are expanding their manufacturing facilities and service networks globally to tap rising worldwide demand.