Modular Construction Market

Updated on : March 27, 2023

Modular Construction Market Size

The global modular construction market size was valued at USD 91.0 billion in 2022 and is projected to reach USD 120.4 billion by 2027, growing at a cagr 5.7% from 2022 to 2027. The growth of this market is ascribed to an increase in concern for work-zone protection, the necessity for reduced environmental effects, and encouraging initiatives by the government. Growth in population and urban development offers prospects for the development of the market. Though, factors like lack of consciousness and the instability in transportation costs may hinder the development of the market.

Attractive Opportunities in the Modular Construction Market

e- Estimated, p- Projected

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Modular Construction Market Dynamics

Drivers- Improving work zone safety and creating sustainability

The fatality rate in the construction sector has remained constant. Safety continues to be a key challenge in the construction industry. The benefits offered by modular construction can help in addressing these issues. Offsite construction reduces the risks of accidents and related liabilities for workers. The use of modular construction for creating and developing buildings, bridges, and stadiums has increased work-zone safety. For instance, while constructing a bridge on-site, workers are exposed to high-speed traffic for a long time, along with other on-site construction hazards, which increases the possibility of accidents. The modular construction process minimizes these threats. Furthermore, this modern construction technique reduces the need for workers on ladders or scaffoldings, which reduces the risk of falls and also avoids close work in tight spaces.

Restraints- Risks of transportation and assembly issues in modular construction

Prefabricated components or modules are transported/ shipped from the factory (offsite location) to the building site, which may have possibilities of damage during transit. The transit cost of these modules or parts of the building is high as it requires large modules to be carried, and the cost is relatively high, depending on the distance of the transit. Furthermore, precision is an important factor to be considered by manufacturers in modular construction. The beams, columns, walls, and floor are required to be flawlessly aligned and joined in standing up. In addition, an improper assembly can end up in joint failure and leaks, which may result in danger to an entire building.

Opportunities- Population increase and development to increase the number of projects

Corresponding to the United Nations Department of Economic and Social Affairs/Population Division and World Population, the world's population is estimated to reach 9.5 billion by 2050. The increasing population, plus the industrial expansion after the economic downturn, has offered a rise up to new constructions in together commercial and residential sectors. Furthermore, the movement of the rural population to urban areas and the transformation of municipalities into cities have further driven the rate of growth of the modular construction market.

Challenges- Lack of awareness in developing economies

The construction industry is considered to be slow and conservative in adopting innovative and new technologies. The construction sector comprises numerous small suppliers; its R&D budget is also limited in comparison to other sectors. The modular construction market has a positive outlook due to high growth in the construction industry. However, in some developing or underdeveloped countries of the Asia Pacific region, as well as in Africa and South America, people are less aware of this construction method and its benefits. People perceive modular buildings to have shorter life or are unable to sustain natural calamities. There is also a lack of awareness about the recyclability of modular buildings in emerging economies in Africa and South America. For the growth of this industry, it is important to educate customers regarding the positive effects of modular construction on the environment and the way it can contribute to a healthy lifestyle.

Modular Construction Market Ecosystem

Permanent modular building is projected to be the largest modular construction market

Permanent modular construction is an advanced building technique that operates offsite manufacturing methods to prefabricate single and multi-story buildings in modular portions on the grounds of sustainability. It can be put together into a current structure or built to stand independently.

The healthcare segment is the quickest-growing end-use sector

Modular construction deals with quiet, safe, and sanitary functions for medical, operating, clinical, and dental consonant use. In this industry, significance is given to reducing construction times and lowering costs while pursuing high-quality building materials and projects. Modular construction methods can be used to offer custom-built facilities with bare minimum budgets, along with keeping strict medical and appealing specifications.

Asia Pacific modular construction market to register the highest CAGR during the forecast period.

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In terms of value and volume, the Asia Pacific region is projected to grow at the highest CAGR from 2022 to 2027. Factors such as the ready availability of raw materials and manpower, along with sophisticated technologies and innovations, have driven the growth of the economy in the Asia Pacific region. According to the World Bank, the two economic giants of the Asia Pacific region, China and Japan, are the world’s second-and third-largest economies as of 2021.

According to the World Bank, Asia Pacific was the fastest-growing region, in terms of both population and economic growth. According to the Population Reference Bureau, China, India, and other emerging Asia Pacific countries had a combined population exceeding 4.5 billion in 2019, which is projected to become an increasingly important driver for global consumption of modular construction over the next two decades.

Modular Construction Market Players

Key players, such as Laing O’Rourke (UK), Red Sea Housing (Saudi Arabia), Atco Ltd. (Canada), Skanska AB (Sweden), Kleusberg GmbH (Germany) have adopted various growth strategies, such as acquisitions, contracts, agreements, and new projects to increase their market shares and enhance their product portfolios.

Laing O’Rourke is a global construction and engineering company. The company designs, constructs, funds, and maintains the built environment by providing the facilities to educate, accommodate, transport, employ, care for, and sustain communities. It owns a number of construction, manufacturing, engineering, and specialist service companies, which combine in order to provide its clients with comprehensive investment, development, as well as management capability. The company’s key services include building construction, engineering expertise, investment and development, infrastructure construction, modular manufacturing, and support services. Laing O’Rourke follows their 70:60:30 design for manufacturing assembly, where 70% of the construction is conducted offsite, leading to a 60% improvement in productivity, and a 30% improvement in the delivery schedule. Through its wide business portfolio, it serves numerous sectors comprising buildings, power, transport, water & utilities, oil & gas, and mining & natural resources.

Modular Construction Market Report Scope

This research report categorizes the modular construction market based on type, material, module, end-use sector, and region.

Based on type:

• Permanent
• Relocatable

Based on the Material

• Steel
• Wood
• Concrete

Based on the Module

• Four-sided
• Open-sided
• Partially open-sided
• Mixed modules & floor cassettes
• Modules supported by a primary structure
• Others

Based on the End-Use Sector

• Residential
• Office
• Education
• Retail & Commercial
• Hospitality
• Healthcare
• Others

Based on the region:

• North America
• Europe
• Asia Pacific
• Middle East & Africa
• South America

Recent Developments

• In June 2020, Algeco Group strengthened its Nordic presence by announcing the acquisition of Wexus Group AS (Norway) from Norvestor Equity AS and other shareholders
• In December 2019, Fluor announced that its joint venture COOEC-Fluor Heavy Industries, Co., Ltd. fabrication yard in Zhuhai, China, safely completed the entire module program for the Kuwait Integrated Petroleum Industries Company (KIPIC) Al-Zour project in Kuwait.
• In October 2019, ATCO Structures & Logistics opened a custom-built manufacturing plant and hire yard facility on the Gold Coast, Queensland.

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