Modular Construction Market Size, Share, Forecast, & Trends Analysis by Product (Permanent, Relocatable), Method (Closed, Open), Material (Wood, Steel, Concrete), Application (Residential, Commercial, Industries, Healthcare) - Global Forecast to 2031

Modular Construction Market Size & Forecast

The Modular Construction Market is expected to reach $189.1 billion by 2031, at a CAGR of 6.9% from 2024 to 2031. The growth of this market can be attributed to several factors, including cost-efficient installation, lack of skilled labor, and the need for faster execution of projects. Additionally, the increasing urbanization, the need to address the global affordable housing crisis, and the increasing focus on sustainable building practices are expected to create market growth opportunities. However, the perception that modular construction is limited to commercial projects may restrain the growth of this market. However, manufacturing and transportation restrictions are a major challenge for the players operating in this market.

Additionally, the integration of digital technologies, automation, robotics, and artificial intelligence (AI) is a key trend in the modular construction market.

Modular Construction Market Growth Drivers

• Cost Efficiency in Installation

In traditional construction methods, factors including labor inefficiencies, material waste, and unpredictable on-site conditions can increase the total overall costs. However, modular construction offers a streamlined and controlled process that minimizes such expenditures. Modular components are manufactured in a controlled factory environment, where labor costs for on-site installation are reduced, as modular components are pre-fabricated and largely assembled in the factory. Thus, it helps minimize the need for extensive on-site labor and reduces the costly errors or delays during installation. Additionally, the assembly process for modular components is streamlined and standardized, thereby making modular construction more cost-effective in terms of installation compared to traditional construction methods. All such factors, along with the increasing need to minimize material waste and reduce financing costs associated with prolonged construction periods, support the market growth in the coming years.

• Lack of Availability of Skilled Labor

The scarcity of skilled labor poses significant challenges in the construction industry as it can lead to project delays, increased costs, and compromised quality. They are essential for executing complex construction tasks efficiently and maintaining high standards of craftsmanship. However, the shortage of skilled labor in many regions shows the importance of alternative construction methods that rely less on on-site workmanship. According to the Associated General Contractors of America (AGC) survey, in 2022, around ~91% of construction firms with open positions report having difficulty finding professionals to fill craft and salaried positions, and a majority ~77% of firms say the difficulty is due to a lack of qualified candidates. Also, ~83% say that workforce shortage and resulting inexperienced skilled labor pool will challenge worker safety and health.

Modular construction offers a solution to this challenge by shifting some of the construction work to controlled factory environments. It helps minimize the need for skilled labor on construction sites, as the majority of construction activities occur in factory settings. It also helps mitigate the impact of labor shortages on project timelines and quality, as it reduces the risk of errors, rework, and quality issues commonly associated with labor shortages in traditional construction. All such factors, along with the increasing need to ensure efficient project delivery and high-quality outcomes, are supporting the overall market growth.

Modular Construction Market Trends

• Integration of Digital Technologies, Automation, Robotics, and Artificial Intelligence (AI)

Digital technologies, including building information modeling (BIM), enable comprehensive digital representations of the physical and functional characteristics of buildings and other physical assets. This helps facilitate collaborative design, planning, and coordination among all project stakeholders in real time. It enables a shared digital workspace where all parties can access the same information at the same time, thereby helping to eliminate communication errors and delays. BIM software can be used to manage building facilities and systems after construction is complete. In April 2023, Autodesk, Inc. (U.S.) and Việt Nam National Construction Consultants (VNCC), a subsidiary of VC Group (Vietnam), signed a memorandum of understanding (MoU) to accelerate digital transformation in the construction industry. Under the recent government's decision no. 258/Q-TTg on the approval of the roadmap for the application of Building Information Modeling (BIM) in the construction sector, Autodesk is expected to provide guidance and assistance to VC Group in their efforts to adopt technologies and digitize design and construction consultancy.

Automation and robotic technologies in modular construction help streamline repetitive tasks and workflows that help reduce manual labor and improve process efficiency. Robotics process automation is used to improve efficiency and precision in modular component fabrication, reduce production times, support efficient material handling, transportation, and assembly of modular components, minimize errors, and enhance quality control. In March 2024, ABB Robotics (a subsidiary of ABB Ltd (Switzerland), collaborated with AUAR (U.K.) to advance the use of robotic micro-factories to build affordable, sustainable, low-energy timber homes.

AI in construction can help businesses drive efficiency, enhance quality, improve performance, and straighten safety on sites. AI algorithms are used to analyze vast amounts of data to optimize construction processes, predict project outcomes, and enable decision-making. With AI construction solutions, companies can proactively monitor job sites for potential hazards and address critical issues to prevent accidents. Hence, companies are leveraging all these technologies into modular construction practices to stay competitive, meet evolving customer demands, and enhance efficiency, productivity, and quality in modular construction processes.

Modular Construction Market Opportunity

• Increasing Focus on Sustainable Building Practices

Growing awareness of environmental issues, regulatory requirements, rising energy costs, and evolving consumer preferences for eco-friendly and healthy living spaces is supporting the demand for sustainable building practices. Sustainable building practices encompass a range of strategies aimed at minimizing environmental impact and conserving resources throughout the building lifecycle. It uses recyclable and renewable materials in building projects and minimizes energy consumption and waste production. Modular construction plays an important role in achieving sustainable building practices as it helps optimize material usage by minimizing waste during the manufacturing process. It uses a controlled environment to minimize site disturbance, pollution, and habitat destruction compared to traditional construction methods. Furthermore, modular buildings can incorporate energy-efficient design features, including natural lighting, ventilation systems, low-emission materials to enhance indoor environmental quality and occupant comfort, efficient HVAC systems, and renewable energy technologies.

Moreover, government initiatives aimed at promoting sustainable building practices and enhancing environmental performance in the construction industry. These initiatives play a crucial role in driving the adoption of sustainable building practices and raising awareness about environmental issues. For instance, In India, the Ministry of Housing and Urban Affairs has launched several initiatives like the Energy Conservation Building Code (ECBC), the National Green Building Council (NGBC), and the Star Rating System to encourage the use of sustainable building materials and practices. In the U.S., the Leadership in Energy and Environmental Design (LEED^®) developed by the US Green Building Council (USGBC) encourages the adoption of sustainable building practices and reduces the environmental impact of the built environment.

Modular Construction Market Analysis: Key Findings

By Product: In 2024, The Permanent Modular Construction Segment to Dominate the Modular Construction Market

Based on product, the global modular construction market is broadly segmented into permanent modular construction (PMC) and relocatable modular construction (RMC). In 2024, the permanent modular construction segment is expected to account for the larger share of ~65.0% of the modular construction market. The large market share of this segment can be attributed to the growing need for controlled manufacturing conditions in factory settings, growing use of PMC in industrial buildings such as warehouses, manufacturing facilities, and distribution centers, increasing use of PMC for constructing various types of residential buildings, including single-family homes, multi-family housing complexes, and apartment buildings.

However, the relocatable modular construction segment is projected to witness a higher growth rate during the forecast period of 2024–2031. This growth is driven by the growing demand for temporary facilities on construction sites, including offices, break rooms, storage units, and restroom facilities, increasing use of RMC for emergencies to provide temporary shelters and medical clinics, and increasing utilization of RMC for temporary retail spaces, pop-up stores, and promotional booths in shopping centers.

By Method: In 2024, The Closed Modular Construction Segment to Dominate the Modular Construction Market

Based on method, the global modular construction market is broadly segmented into closed modular construction and open modular construction. In 2024, the closed modular construction segment is expected to account for the larger share of the modular construction market. The large market share of this segment can be attributed to the growing demand for high-quality buildings with minimal variability, the increasing need to lower overall project costs due to reduced material waste and minimized on-site labor requirements, growing use of closed modular construction in the construction of commercial buildings and residential buildings, and increasing need to avoid project schedules and minimizes project downtime due to weather-related delays.

However, the open modular construction segment is projected to witness a higher growth rate during the forecast period of 2024–2031. This growth is driven by the increasing demand for flexibility in design and customization options that allow developers to create dynamic and integrated urban environments, as well as the increasing use of open modular construction in the construction of public spaces and cultural buildings such as parks, plazas, museums, theaters, and recreational facilities.

By Material: In 2024, The Steel Segment to Dominate the Modular Construction Market

Based on material, the global modular construction market is broadly segmented into wood, steel, concrete, and other materials. In 2024, the steel segment is expected to account for the largest share of ~43.0% of the modular construction market. The large market share of this segment can be attributed to its benefits including strength-to-weight ratio, flexibility in design and construction, and recyclability that makes it ideal for constructing robust and long-lasting modular structures. The segment is also projected to witness the highest growth rate during the forecast period of 2024–2031. This growth is driven by the increasing use of steel in the construction of commercial buildings, manufacturing facilities, and distribution centers due to its strength, durability, consistent quality, and precision in fabrication that results in high-quality modular components.

By Application: In 2024, The Residential Segment to Dominate the Modular Construction Market

Based on application, the global modular construction market is broadly segmented into residential properties, commercial spaces, hospital/clinics/medical facilities, education & institutional, government & public sector, aerospace & defense, and other applications. The commercial spaces segment is further segmented into office buildings, hotels, retail, and logistics/warehouse. In 2024, the residential properties segment is expected to account for the largest share of ~56.0% of the modular construction market. The large market share of this segment can be attributed to the growing demand for modular construction cost-effective and efficient housing solutions for homeowners, increasing demand for temporary modular shelters to offer safe and secure accommodations in response to natural disasters and other crises, growing demand for urban housing, and increasing need to address housing shortages and affordability challenges. The segment is also projected to witness the highest growth rate during the forecast period of 2024–2031.

Geographical Analysis

Based on geography, the global modular construction market is segmented into North America, Europe, Asia-Pacific, Latin America, and the Middle East & Africa. In 2024, North America is expected to account for the largest share of ~40.0% of the modular construction market, followed by Europe, Asia-Pacific, Latin America, and the Middle East & Africa. North America's significant market share can be attributed to several key factors, including the increasing technological advancements to streamline production processes, improve efficiency, and enhance quality control in modular construction projects; shortage of skilled labor; increasing demand for scalable and efficient modular spaces to meet the housing and infrastructure needs of growing urban populations; and growing emphasis on sustainability solutions to reduce construction waste, minimize site disturbance, and optimize energy efficiency in the region.

However, the market in Asia-Pacific is slated to register the highest growth rate of ~8.5% during the forecast period. The growth of this regional market is attributed to the region’s rapid urbanization, increasing need for cost-effective and scalable solutions to build affordable housing units and meet the needs of growing populations, and increasing government initiatives for the development of smart cities, affordable housing projects, and infrastructure upgrades.

Modular Construction Market: Key Companies

The report offers a competitive analysis based on an extensive assessment of the leading players’ product portfolios, geographic presence, and key growth strategies adopted in the last 3–4 years. Some of the key players operating in the modular construction market are ATCO Ltd. (Canada), Guerdon, LLC (U.S.), Skanska AB (Sweden), Bouygues Construction (France), KLEUSBERG GmbH & Co KG (Germany), Lendlease Corporation (Australia), Red Sea International (Saudi Arabia), Bechtel Corporation (U.S.), Honomobo (Canada), WillScot Mobile Mini Holdings Corp. (U.S.), SG Blocks, Inc. (U.S.), Speed House Group of Companies (UAE), CIMC Modular Building Systems Holdings Co., Ltd. (China), Wernick Group (Holdings) Ltd. (U.K.), Giant Containers Inc. (Canada), Premier Modular Limited (U.K.), and LAING O'ROURKE (U.K.).

Modular Construction Industry Overview: Latest Developments from Key Industry Players

• In November 2023, ABB Robotics (a subsidiary of ABB Ltd (Switzerland), collaborated with Porsche Consulting GmbH (Germany) to deliver the project to develop innovative new practices in modular housing manufacturing.

• In June 2023, The Berkeley Group plc (U.K.) partnered with Cobuilder International (Bulgaria) to boost the efficiency of offsite construction. Under this partnership, Berkeley Modular will use manufacturer data to construct a range of volumetric modular housing products.

• In May 2023, Kodasema OÜ (Estonia) signed a strategic partnership agreement with Presidio Invest (UAE) to explore business opportunities for bringing KODA houses to the Middle East, with a focus on the territories of Saudi Arabia and the United Arab Emirates.
• In March 2022, KUKA Assembly & Test GmbH (Germany) collaborated with Wiksfors Technology AB (Sweden) in the modular house construction industry. Under this collaboration, both companies will help facilitate the ‘next generation factories’ that will provide accommodations produced on a very large scale: assembled and constructed offsite.
• In August 2021, SG Blocks  Inc. (U.S.) partnered with ATCO Structures (Canada) on a national modular fleet rollout in the U.S. Under this partnership, both companies will work alongside sustainable housing solutions providers to deliver modular structures.

Modular Construction Market Research Summary:

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