Modular Construction Market - Growth, Trends, COVID-19 Impact, and Forecasts (2022 - 2027)

Modular Construction Market - Growth, Trends, COVID-19 Impact, and Forecasts (2022 - 2027)

The modular construction market was valued at more than USD 40 billion in 2021, and the market is projected to register a CAGR of over 8% during the forecast period (2022-2027).

Modular construction is the use of pre-engineered building units that are delivered to the construction sites and assembled as large volumetric components of a building. Modular construction takes most of the construction phase away from the building site. The surging demand for hospitals and patient bed facilities based on modular construction significantly increased during the peak of the pandemic as this type of construction needs a significantly less amount of completion time. Such modular constructions during the pandemic, globally, stimulated the demand in the market studied.

Key Highlights

• Rising demand from construction industries in countries of Asia-Pacific and the time and cost-effectiveness of modular construction work with lower defects and reworks needed are expected to drive the market's growth. On the flip side, the high cost of logistics involved in modular construction is expected to hinder the growth of the market studied.
• In the construction industry, the permanent modular segment accounted for the largest share, and by material, the steel segment accounted for the largest share.
• The construction industry has been exploring innovative materials and technologies that can provide more high-quality housing using less construction time. On this basis, modular construction is one of the prominent sectors seeking lean techniques to improve overall operational workflows in providing housing with enhanced quality, productivity, safety, and efficiency.

Key Market TrendsIncreasing Demand from the Commercial Sector

• The commercial sector is the largest segment in the modular construction market. Commercial buildings are constructed using the modular construction process in accordance with the International Building Code (IBC) or a version of a code modeled after the IBC and state regulations.
• The increasing demand for modular construction in Asia-Pacific is moving much of the construction process from the building site into factories. "While countries like China, Japan, Singapore, and Australia are increasingly adopting modular buildings to meet labor and housing shortages, increase in industrialization, rising urbanized population, rising demand for eco-friendly and sustainable construction and government support.​"
• Government initiatives to reduce waste and promote green construction and building techniques is driving the demand for modular construction. For example: Singapore has mandated elements of prefabricated, pre-finished, and volumetric construction (PPVC) for all the projects on the government’s land. This is backed with subsidies for companies that participate with the aim of increasing and standardizing modern methods of construction (MMC) in the country, thereby increasing the demand for off-site construction.​​
• In August 2021, Shenzhen announced its project to expand the campus of three local schools, with an estimated investment of CNY 1100 million. Approximately 194,000 square meters of new school buildings will be built in steel structures by August 2022.
• Therefore, the above factors are expected to have a significant impact on the market in the coming years.

China to Grow at a Faster Pace

• China accounts for the largest economy in Asia-Pacific. Increased construction activities in the country due to improved standards of living, increased spending power, and other factors are anticipated to boost the growth of the construction sector in the country.
• The rising household income levels, combined with the population migrating from rural to urban areas, are expected to continue to drive the demand in the residential construction sector in the region. The increased focus on affordable housing by both the public and private sectors is driving the growth in the residential construction sector.​
• Non-residential infrastructure is expected to grow considerably. The aging population in the country is creating a demand for the construction of healthcare facilities and new hospitals. The structural changes in the Chinese economy over the past few years, with the service sector taking a larger share in the total GDP, are giving rise to the construction of huge commercial and office spaces.
• ​The country has the largest construction market in the world, encompassing 20% of all construction investments globally. China is expected to spend nearly USD 13 trillion on buildings by 2030, creating a positive market outlook.
• The country has the largest construction market in the world, encompassing 20% of all construction investments globally. China is expected to spend nearly USD 13 trillion on buildings by 2030, creating a positive market outlook for the modular construction market.
• According to the National Development and Reform Commission, the Chinese government approved 26 infrastructure projects at an estimated investment of about USD 142 billion in 2019, which are estimated to be completed by 2023 and are ongoing. The growing demand for housing is likely to drive residential construction in the country, both in the public and private sectors. The increase in the construction of tall buildings and hotels is driving the market studied.
• Thus, the factors mentioned above are expected to boost the demand in the modular construction market in the region in the coming years.

Competitive Landscape

The modular construction market is highly fragmented, with no player holding a significant share to influence the market. Some of the key players in the modular construction market include Katerra, Skanska, Bouygues Construction, Balfour Beatty, and TAISEI CORPORATION (not as per ranking).

Additional Benefits:

• The market estimate (ME) sheet in Excel format
• 3 months of analyst support

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