Modular construction refers to a process in which a building is constructed off-site, under controlled plant conditions, using the same materials and assembling methods as conventionally built structures. Modular buildings are factory-made and then transported to the construction site, where they are assembled and joined together. Modular construction offers advantages such as reduced construction timelines, decreased waste production, and improved quality control. With growing infrastructure development needs and rising construction costs, modular construction is increasingly being adopted as a preferred construction methodology.
The global Modular Construction Market is estimated to be valued at US$ 84 Billion in 2024 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.
Increasing Demand for Faster and Less Costly Construction:
Modular construction significantly reduces construction timelines as modules are assembled in a controlled factory environment and then transported and assembled on-site. This enables faster completion of projects compared to traditional construction. In addition, using prefabricated modules eliminates weather dependency and improves productivity. Modular construction is also estimated to be 20% more cost-effective than traditional on-site construction. With growing demand for faster project turnarounds and reduced construction costs, modular construction is emerging as an attractive alternative globally. Rising adoption is expected to drive robust growth of the modular construction market over the forecast period.
Porter's Analysis
Threat of new entrants: The threat of new entrants in the modular construction market is low due to the large capital requirements and established customer relationships of existing players.
Bargaining power of buyers: The bargaining power of buyers is moderate due to the differentiated nature of modular construction solutions. However, price transparency increases competition.
Bargaining power of suppliers: The modular construction market has high buyer power over suppliers as it is a highly fragmented industry with numerous component and material providers.
Threat of new substitutes: The threat of substitutes is moderate as traditional stick-built constructions remain a cheaper alternative, although modular builds provide other benefits.
Competitive rivalry: The competitive rivalry is high owing to the presence of numerous global and regional players competing on product quality, pricing and innovation.
SWOT Analysis
Strength: Modular construction enables faster building timelines, reduces construction waste, and offers flexibility of design. It provides savings on labor costs.
Weakness: Relatively high initial investment requirements. Restricted customization potential compared to traditional construction.
Opportunity: Growing demand for affordable housing and commercial real estate. Rise in infrastructure investment in developing nations.
Threats: Economic slowdowns reducing new construction activities. Restrictive building codes and regulations in some regions.
Key Takeaways
The Global Modular Construction Market Demand is expected to witness high growth over the coming years due to rising demand for affordable, innovative and sustainable construction methods. The global Modular Construction Market is estimated to be valued at US$ 84 billion in 2024 and is expected to exhibit a CAGR of 6.7% over the forecast period 2023 to 2030.
Regional analysis:
North America currently dominates the global modular construction market due to strong industry growth in the US and Canada. Asia Pacific is projected to be the fastest growing region during the forecast period supported by the development of smart cities and increasing infrastructure spending in China, India and Southeast Asia.
Key players:
Key players operating in the modular construction market are Laing O'Rourke, Red Sea Housing, Atco, Bouygues Construction and VINCI. These players are focusing on expanding their geographic footprint and capabilities through strategic partnerships and acquisitions.
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