Modular construction refers to a process in which prefabricated components are manufactured offsite and transported to the construction site for installation and assembly. Modular housing offers several advantages over traditional construction such as reduced construction timelines and cost savings, versatility in design, and increased quality. Housing shortage coupled with rising population is propelling the demand for affordable housing options worldwide. This has resulted in rising demand for modular construction which provides faster delivery of housing projects.
The global Modular Construction Market is estimated to be valued at US$ 84.48 billion in 2023 and is expected to exhibit a CAGR of 6.7% over the forecast period 2023 to 2030, as highlighted in a new report published by Coherent Market Insights.
Market Opportunity:
Reduced construction timelines
One of the major market opportunities for modular construction is reduced construction timelines. Modular construction significantly reduces construction time as major construction activities are performed in a factory under controlled conditions. The building modules are then transported to site and assembled thereby reducing onsite construction time significantly. According to estimates, modular construction can reduce construction timeline by 30-50% as compared to traditional construction. The faster delivery of projects supports in addressing the rising housing shortage. Reduced timelines also allow owners and developers to earn revenues quickly, thus driving the demand for modular construction globally.
Porter’s Analysis
Threat of new entrants: The threat of new entrants is moderate as the modular construction market requires high initial investments and certifications. However, new construction methods and technologies help new players enter this market.
Bargaining power of buyers: The bargaining power of buyers is high given the fragmented nature of the market with presence of multiple construction players. Buyers can negotiate on price and delivery timelines.
Bargaining power of suppliers: The bargaining power of suppliers is moderate since raw materials required are commodities available from multiple sources globally. However, specialized equipment and software suppliers hold some bargaining power.
Threat of new substitutes: The threat of new substitutes is low as modular construction has advantages over traditional construction methods in terms of speed, sustainability, and cost savings.
Competitive rivalry: The competitive rivalry is high among major modular construction players to gain higher market share through differentiation, new product launches, and regional expansion.
SWOT Analysis
Strength: Modular construction offers 40-50% faster construction, lower cost than traditional methods, and minimal site disruption. Standardization of designs and processes enable mass production.
Weakness: Heavy upfront investments, specialized skills required, transportation challenges for large modules. Initial setup costs are high.
Opportunity: Rising infrastructure investments, sustainability needs, and affordable housing demand drive the market. Growth in Asia Pacific and Middle East region offers new opportunities.
Threats: Economic slowdowns, strict transportation regulations, and shortage of skilled labor pose threats. Interest rate fluctuations affect future projects.
Key Takeaways
The Global Modular Construction Market Growth is expected to witness high at a CAGR of 6.7% during the forecast period of 2023 to 2030. The market size is projected to reach US$ 84.48 Bn by 2023.
Regional analysis
The Asia Pacific region dominates the global modular construction market with over 35% share owing to the rapid urbanization and infrastructure development projects in China, India. Countries like Singapore extensively use modular construction techniques for urban development. The region is expected to witness the fastest growth during the forecast period.
Key players
Key players operating in the modular construction market are Laing O’Rourke,Red Sea Housing,Atco,Bouygues Construction,VINCI,Skanska AB,Algeco Scotsman,KLEUSBERG GmbH,Katerra,Lendlease Corporation. Major players are focusing on partnerships, mergers and acquisitions to expand their modular product portfolio as well as geographical footprint.
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