What Is the Future of Modular Construction in UK’s Real Estate Market?

April 19, 2024

Modular construction, a building technique that has risen to the forefront of the construction industry, is changing the way homes are built. The UK real estate market, in particular, has been a significant adopter of this approach, with many industry professionals claiming it is the future of housing.

So, what exactly does this future look like? And how does the UK’s modular construction sector measure up on a global scale? This report provides an overview of the modular construction market, with particular focus on housing projects in the UK.

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The Modular Construction Overview

Modular construction refers to the process of building modular units off-site, in a factory setting, where they are then transported to the building site to be assembled. This construction method is fundamentally different from traditional on-site building, as it enables the simultaneous development of the site and building modules, significantly reducing the total construction time.

The modular construction sector has grown significantly over the past decade. According to market reports, the global modular construction market was valued at $67.4 billion in 2020. It is expected to grow at a compound annual growth rate (CAGR) of 6.1% from 2021 to 2028, reaching an estimated value of $106.22 billion by the end of 2028.

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In the UK, modular construction represents a substantial portion of the building industry. In 2020, the market value of prefabricated modular housing construction was estimated at £2.85 billion. With a robust pipeline of planned projects, industry experts expect this figure to increase substantially in the future.

The Benefits of Modular Construction

Modular construction has several notable advantages over traditional building methods. One of the most significant is the reduction in construction time. Thanks to factory production, modular construction can be up to 50% faster than traditional building methods. This allows projects to be delivered more quickly, reducing holding costs and generating faster return on investment.

Another considerable advantage is the minimisation of weather-related delays. Because the majority of the construction process happens in a controlled factory environment, projects are less likely to be delayed by adverse weather conditions. This consistency in the building process can lead to higher quality outcomes.

Moreover, modular construction is known for its sustainability. The controlled factory environment allows for better management of materials and reduces waste. Additionally, many modular buildings are energy-efficient, contributing to the reduction of carbon footprints.

The UK’s Housing Sector and Modular Construction

In the UK, modular construction is increasingly being recognised as a viable solution to the country’s housing crisis. With the population growing faster than the rate at which homes are built, the UK needs to build hundreds of thousands of homes each year to meet demand. Modular construction, with its potential for speed and efficiency, offers a possible solution to this problem.

Several housing associations and developers have already embraced modular construction. For example, London-based housing association Swan has pledged to build 100% of its new homes using modular construction. Similarly, developer Legal & General has committed to building 3,500 modular homes per year.

The Future of Modular Construction in the UK

The future of the UK’s modular construction industry looks promising. The government has recognised the potential of modular construction and is supporting its growth through policies and funding. In 2020, the UK government announced a £12.2 billion fund for affordable homes, a significant portion of which is expected to be allocated to modular construction projects.

Furthermore, industry reports suggest that modular construction will become more mainstream. A report by the Royal Institution of Chartered Surveyors (RICS) predicts that by 2030, 25% of all new homes in the UK will be built using modular construction.

However, the future is not without challenges. One of the main barriers to the adoption of modular construction is the perception of modular homes. Many people still associate modular homes with post-war prefabs or consider them inferior to traditionally built homes. Changing this perception will be crucial for the future growth of the modular construction industry.

In summary, the future of modular construction in the UK’s real estate market is bright. With its potential for speed, efficiency and sustainability, it offers a viable solution to the country’s housing crisis. However, to fully realise this potential, perceptions of modular homes need to change, and further support from the government and industry will be necessary.

Modular Construction and Digital Technologies

Digital technologies are playing a substantial role in advancing modular construction. Innovations such as Building Information Modelling (BIM), Virtual Reality (VR), and Augmented Reality (AR) are being used to improve the planning, design, and assembly processes of modular homes.

Building Information Modelling is a 3D model-based process which gives architecture, engineering, and construction professionals the insights and tools to more efficiently plan, design, construct, and manage buildings. In the context of modular construction, BIM helps in designing the modules with greater accuracy, enabling a more seamless assembly on-site.

Virtual Reality and Augmented Reality, on the other hand, can be used to create virtual walkthroughs of the designed modules. This allows stakeholders to visualise what the final product will look like, thereby enabling them to make any necessary changes before the construction begins.

The use of digital technologies in modular construction is expected to increase in the future. According to a report by Transparency Market Research, the global modular construction for high rise buildings market, powered by digital technologies, will expand at a CAGR of over 5.60% between 2021 and 2028.

Case Studies of Successful Modular Construction in the UK

There are several case studies that show the success of modular construction in the UK’s housing market.

One such example is the residential development at Apex House in Wembley. This 29-storey building, built in 2017, was at the time the tallest modular building in Europe. The project was completed in just 12 months, half the time it would have taken using traditional construction methods. The building comprises 580 student units and underlines the speed and efficiency of modular construction.

Another case study is the Lillie Square development in London. This project, designed by Farrells and delivered by Vision Modular Systems, consists of 808 modular homes across multiple blocks. Despite the complex nature of the project, the first phase was completed in just 24 months. This case study further exhibits how modular construction can significantly reduce construction time, even for large-scale housing projects.

Conclusion: The Road Ahead for Modular Construction in the UK

The future of modular construction in the UK’s real estate market seems to be on a promising trajectory. As the construction industry evolves, the push for quicker, more efficient, and sustainable methods of construction is becoming more prominent. Modular construction, with its numerous advantages, fits well into this changing landscape, and its adoption is likely to increase in the coming years.

However, the journey is not without roadblocks. Addressing the perception issue of modular homes is critical. Efforts need to be made to educate the public and stakeholders about the benefits of modular homes and how they are not inferior to traditionally built homes.

Moreover, the government and the construction industry need to work together to foster an environment conducive to the growth of modular construction. Policies and regulations need to be reviewed and updated to encourage the use of modular construction in affordable housing projects.

The adoption of digital technologies in the modular construction process can also be a game-changer, providing the tools and insights necessary for more efficient design and assembly of modular homes.

In conclusion, while challenges exist, the potential of modular construction in transforming the UK’s real estate market and addressing the housing crisis is immense. With the right support and strategies, the future of modular construction in the UK can indeed be bright.