The Europe Prefabricated Housing Market size is expected to grow from USD 30.49 billion in 2023 to USD 41.95 billion by 2028, at a CAGR of 6.59% during the forecast period (2023-2028).
The huge demand for prefabricated housing demand is driving the market. Furthermore, the demand for single and multi-family housing is also driving the market.
Currently, you can see the demand for prefabricated products in various shapes and dimensions across the region. People also use prefabricated metal products to fulfill modern architectural demands where the building structures include decorative elements with unique shapes. There is a trend in the increased usage of prefabricated components in the construction sector owing to the cost benefits and time constraints. Rapid urbanization and the need to overcome the shortage in housing are providing a market scope for prefabricated structures.
The prefab construction market in the United Kingdom is transforming with increasing confidence and capacity in prefabrication construction solutions. The penetration of prefab housing in the United Kingdom is lower compared to other European countries, such as Sweden or Germany. According to an industrial source, out of the 200,000 homes constructed in the country every year, about 15,000 are modular. Modular construction technology gained more attention in Europe's building industry over the last few years. The increasing investments in the UK’s modular construction sector are also boosting the prefab industry growth. Homes, Legal & General announced plans to deliver thousands of modular homes annually.
The desire for higher-quality, environmentally friendly homes is increasing across the continent, with the biggest percentages being in the United Kingdom and Germany. The prefabricated construction sector is anticipated to grow dramatically when additive manufacturing is adopted in Europe. Businesses are implementing environmentally friendly products and production techniques to differentiate themselves. The emphasis on energy efficiency led to the invention of materials that absorb energy, including micro homes. Prefabricated house demand is expanding as more new home purchasers take advantage of the construction method's benefits in a market experiencing improved economic and demographic conditions. Six Northern European countries were expected to sell an estimated 70,100 units by the end of 2022, with German demand representing a sizeable level, particularly for turnkey solutions.
The UK, France, and Spain had significant gains in investment, with volumes increasing by 43%, 31%, and 48%, respectively, over the same period in 2021. Yet, the current socioeconomic environment will probably force activity to slow down through Q3. But, we anticipated that investment activity would take up again as the market adjusted to these new circumstances, with solid underlying demand fundamentals supporting a revival in activity towards the end of 2022. More than 20% of renters in Spain currently pay more than 40% of their income in rent. The possibility of rent control regulation consequently moved up the political agenda. The current state of economic uncertainty and the potential for new laws may be a barrier to investors.
In H1 2022, multifamily yields in Europe showed a mixed picture. Other markets, like France, Ireland, Germany, and Sweden, saw stable yields. It occurred in Germany due to persistent demand from equity-rich investors, which supported yield performance. While this happened, yields in the UK became harder as the market matured and early investments beat their initial underwrites, increasing investor interest. However, rates shifted marginally in other areas, such as Amsterdam, Madrid, and Oslo, rising by 25 bps, 15 bps, and 10 bps, respectively, in Q2 2022. Investors are more cautious in light of the current political and economic unpredictability. Investors that use a lot of leverage temporarily leave the market while they await the outcome of the next few months with interest rates, inflation, and build costs.
The Europe Prefabricated Housing Market is highly competitive and fragmented, with no players occupying the major share. Skanska AB, Peab AB, Swietelsky AG, Laing O'Rourke, and Bouygues Batiment International are major players. The market is expected to grow during the forecast period due to increased prefab construction building investments, upcoming major projects in the country, and other factors driving the market. Prefabricated building systems and construction hold a high potential to improve the efficiency and performance of the European construction industry in a more sustainable sense. Companies are using environmentally friendly materials and manufacturing techniques to differentiate their products from competitors.
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