Is modular construction the all-in-one solution?

More heads than roofs

Housing is a basic human need and safe shelter is crucial for public health in the broadest sense. The COVID-19 pandemic accelerated a worldwide housing shortage of (affordable) homes. According to the United Nations about 1.6 billion people live in substandard housing and 100 million are homeless. By 2030, it is estimated that there will be 3 billion people in need of affordable housing in cities. This translates into a demand for 96,000 (!) new affordable and accessible housing units every day.  

It is safe to say that this structural demand for new homes can’t be met without innovations, at scale and rapidly. Traditional construction methods are (relatively) high in costs and time consuming. Because there are so many factors playing a role…

Solving the need piece by piece

Offsite modular construction could be the solution to the increasing housing need.

Modular (or prefabricated) construction is not a brand-new concept in the industry. Standardized components are being produced in an off-site factory, to be assembled later on-site. In history, prefab buildings weren’t very popular. Increased awareness around the advantages of prefabricated buildings and steel structures is on the rise. Sustainability, affordability, durability, and less build time are factors affecting the growth of the modular housing market. Strong demand in countries with favorable demographics, such as Brazil and India continues to rise because it provides a faster and more affordable solution to expand and upgrade the housing stock compared to most traditional housing. New housing construction is expected to decline in Europe and Japan, while the pandemic has exacerbated the pre-existing weakness, which will particularly affect global demand. The housing crisis is one of the main reasons for this new wave of attention and investment in modular housing.

Probably the biggest advantage of modular construction is speed. Construction schedules for prefab buildings are 30 to 50% shorter than those that are traditionally built.

Inherently, a shorter building process comes with some great cash-flow advantages as housing authorities and developers will be able to rent out the buildings much faster.

In terms of building costs both traditional and prefab buildings have their own advantages and disadvantages. A cost comparison between the two construction methods could favor either method depending on the project specifics. On a large scale however, modular building is the more affordable option.

A better future

Sustainability is a topic that can’t be overlooked these days. Modular building gives the option to choose better and more sustainable materials. We even see some zero carbon products popping up in the market. In addition, prefab buildings come with a high level of thermal insulation, minimizing the needed heating. A recent study by the University of Cambridge and the Edinburgh Napier University stated that factory-produced homes can produce up to 45% less carbon than traditional methods of residential construction.

We are seeing a number of companies building great momentum across Europe + Americas and being backed by large (institutional) investors to expand operation and build more momentum.

Should you wish to get insights into the leading players or leverage our extensive global network please reach out: hello@theproptechconnection.com

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