Prefabricated building systems and methods have been met with mixed feelings in the South African building industry, with some projects successfully reaping the benefits of modular approaches and others failing completely.
However, considering increasing labour costs and pressure on construction timelines, both locally and globally, the adoption of modular and prefabricated buildings will definitely play a part, and probably a big one, in future construction. And for building material manufacturers, this spells opportunity.
The expected growth
In fact, Frost & Sullivan’s Global Modular and Prefabricated Buildings Market, Forecast to 2025 expects the global modular and prefabricated buildings market to expand at a sturdy compound annual growth rate (CAGR) of 6,3% from 2018 to 2025.
Key factors such as a global uptick in construction activities and significant cost, labour and time savings in offsite construction are what is expected to drive market revenues towards $215 billion by 2025.
“Despite increased construction costs from an off-site construction, a net saving of up to 7% is possible because of shortened construction periods,” says Prathmesh Limaye, senior analyst for chemicals and materials in infrastructure and mobility.
“In addition, prefabricated buildings are increasingly being perceived as sustainable solutions for construction projects due to a growing usage of materials such as timber and aluminium composites, which are more energy efficient than concrete,” he adds.
The global market
Recovering economies along with high-growth markets are specifically expected to provide lucrative market opportunities, while slower growth is anticipated in more mature markets due to increased construction activities in developing regions.
From a competitor position, the market is still highly fragmented with several regional and smaller suppliers due to the relative ease of setting up a business in this space. The industry is, therefore, slated to experience consolidation with multiple merger and acquisition activities occurring in the foreseeable future.
“Many small and regional participants influence the overall pricing and distribution patterns in regional markets,” notes Limaye.
How to make it in an unpredictable future
To gain a competitive advantage, Limaye suggests that players emulate innovative companies such as Katerra, a technology-driven offsite construction company, and Welement, an offsite timber element manufacturer, and adopt automation and design tools to increase the quality and precision in their construction.
Additional growth opportunities include:
• Manufacturers promoting more cost-effective and environmentally sustainable solutions that are compliant with regulations mandated by international organisations.
• Gaining wider coverage by improving their portfolios with products that can be customised to end-user specifications and also promote ease of installation.
• Expanding operations into high-growth regions.
• Offering products that are comparative with those offered by regional and local manufacturers.
What is the challenge?
“Despite significant market expansion prospects, perceptions surrounding the high initial cost of construction and transportation, design rigidity, multiple stakeholder involvement and a lack of skilled labour are key factors slowing adoption rates and hindering market growth,” Limaye warns.
Therefore, to make the most of the opportunities associated with modular and prefabricated construction in a constantly evolving regulatory landscape, these are aspects that need to be addressed as part of the process.
Thanks and acknowledgement are given to Frost & Sullivan for the information provided.
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