Do Prefabrication and Modular Construction Have a Bright Future?

This article is part of a blog series exploring how prefabrication and modular construction change the way structures are built.

Two of the trending methods of building sustainable constructions to reduce CO2 emissions are prefabrication and modular construction. These methods have a promising future thanks to:

  • a healthy market growth
  • sustainable practices
  • innovative solutions.

The growth of the prefabrication and modular construction industry is fueled by:

  • the high quality of its offering
  • its ability to survive the supply chain crisis and workforce shortages
  • its modularity that helps to quickly construct flexible, and cheaper solutions.

The prefabrication and modular construction industry

Innovation is the key word for the prefabrication modular construction businesses as they can:

  • provide sustainable and quality products
  • improve efficiency
  • reduce costs
  • improve clients’ experience
  • enhance safety and security

Modular construction and prefabrication methods offer:

  • sustainable building practices incorporated into their processes
  • low pollution and greenhouse gases
  • great constructions built with fewer resources
  • solutions producing very little waste.

According to a study by the University of Cambridge and Edinburgh Napier University, factory-produced homes in prefabrication and modular buildings emit up to 45% less carbon dioxide than traditional construction.

The prefabrications and modular construction methods are gentler on the environment than traditional methods. They:

  • require fewer deliveries of materials to the site
  • need a lower number of laborers on site
  • consume less fossil fuel
  • protect the surrounding landscape
  • lessen disruptions to the sites as they are built quicker.

What are prefabrication and modular construction?

Both methods manufacture buildings or structures in factories and then deliver them to the site where they will be assembled, and professionally installed.

Are buildings built under these methods of poorer quality than traditional buildings? No, this is a myth as they:

  • are made of good quality durable materials
  • are assembled by highly qualified and trained staff
  • are automated, avoiding a lot of human potential errors, wastes, and costly reworks
  • respect the international building codes (IBC).

Types of prefabrication and modular construction

Prefabricated buildings and structures may either be temporary/portable, or permanent standalone buildings.

How do prefabrication and modular construction work?

Most of the prefabrication and modular construction are built in factories, and final adjustments are made on-site during installation. The result is that it mitigates the risks associated with extreme weather conditions, as modules and structures are fabricated in a climate-controlled environment.

The market

The global modular construction market size was USD 79.92 billion in 2022 and is projected to grow to USD 131.58 billion by 2030.

Construction of modular buildings in comparison to traditional constructions are:

  • built more quickly
  • more flexible.

Market drivers

It is forecasted that spending on R&D for cutting-edge building solutions, following incentives from many governments worldwide, will boost the modular construction market share. The programs are driving changes that lessen construction waste and support green buildings.

As an example, let's have a look at the government of Singapore.

The program depends upon prefabricated prefinished volumetric construction (PPVC) elements. PPVC is a construction method that encapsulates 3-dimensional modules, internal finishes, fixtures, and fittings, in an off-site fabrication facility, before it is delivered and installed on-site.

The Singapore government also incentivizes businesses to standardize new building techniques.

Market restrictions

The funding of strategic project pre-planning puts a lot of pressure on starting to construct the assets quickly, so businesses are performing project stage planning at a very late stage. It results in the modular construction market growth being badly impacted, as owners have already made their decisions to use traditional construction methods.

Another hindrance followed the total shutdown of the COVID-19 pandemic, which introduced volatility and uncertainty in the construction industry market, badly impacting the prefabrication and modular construction segment, due to a decline in new residential and non-residential constructions. The major countries affected were India, China, the U.S., Italy, Israel, and the U.K.

Market segmentation

The market is segmented into permanent modular construction (PMC) and relocatable modular construction.

PMC represents the highest market share and is the fastest-growing industry segment. The PMC modules can:

  • be fitted to existing buildings
  • provide time and cost-efficient turn-key solutions.

The materials used in the market are:

  • concrete
  • steel
  • wood.

In 2022, concrete was the largest materials segment, due to the increasing demand for concrete materials, to build road and highway infrastructures.

Start-ups in emerging countries are growing fast, resulting in the progress of the commercial sector. The applications market is divided into:

  • commercial
  • healthcare
  • educational & institutional
  • hospitality
  • residential and others.

Asia Pacific is the fastest-growing region over the projected period. The regional market is anticipated to be driven by expanding building activity due to increased demand from the residential and commercial sectors.

Prefabrication and modular construction are popular worldwide, allowing high quality and leading to increased market acceptance, as they:

  • serve remote locations
  • generate very little waste
  • are environmentally friendly
  • have a flexible process.

Global modular construction market growth

The need for cost-effective prefabrication and modular construction technologies, to ensure uniform quality, has significantly increased the demand for using these methods, facilitating:

  • the creation of new jobs
  • more quality cheap housing solutions
  • less fossil fuel energy consumed
  • a higher level of clean water provided
  • the construction of better transportation infrastructure
  • improvements in social and health services.

The growth of prefabrication and modular constructions is boosted by:

  • urbanization & industrialization in developing countries
  • a growing worldwide population
  • worldwide government initiatives to increase new houses to accommodate population growth.

Unfortunately, the prefabrication and modular constructions are not popular in regions prone to earthquakes, due to their unproven reliability. As a result, the market development of modular construction is not growing as fast as it could.

During the COVID-19 pandemic, construction, manufacturing, hotel, and tourism industries were affected, resulting in lower activities for the prefabrication and modular construction market. Fortunately, construction companies are now operating at full capacity, which helped the prefabrication and modular construction market to get back to growth.

Growing segments of the market

Permanent prefabrication and modular constructions have registered the highest revenue, and re-locatable constructions are expected to grow at a significant rate.

Permanent modular houses are inexpensive and simple to build. They:

  • cover a wide range of designs and patterns
  • include duplex and multistory apartments
  • are aesthetically built with the use of CorTen steel with anticorrosive paint coating.

The increasing trend of green buildings and new infrastructures across developed countries, such as the U.S., the UK, France, and Germany, is forecasted to create worthwhile opportunities for the expansion of the permanent modular construction industry thanks to initiatives like:

  • governments focusing on the environmental impact of buildings on the climate
  • the green building concepts, and modular construction for space constraints in large cities
  • infrastructure spending in various countries, such as Germany, France, India, and others,

For example, the company BIG was commissioned to design Dortheavej in 2013 by Danish non-profit affordable housing association Lejerbo, whose mission was drafted by Danish urban space designer Jan Gehl. BIG was asked to:

  • create affordable housing and public space in the area
  • keep the pedestrian passageways open and the adjacent green yard untouched.

BIG and Lejerbo were honored by the Danish Association of Architects with the Lille Arne Award for prioritizing the spatial qualities of the residences and the building strategy on a strict affordable housing budget, using prefabrication and modular construction methods.

BIG's founding partner, Bjarke Ingels said:

Affordable housing is an architectural challenge due to the necessary budget restrictions. We have attempted to mobilize modular construction with modest materials to create generous living spaces at the urban as well as the residential scale. The prefabricated elements are stacked in a way that allows every second module an extra meter of room height, making the kitchen-living areas unusually spacious. By gently adjusting the modules, the living areas open more towards the courtyard while curving the linear block away from the street to expand the sidewalk into a public square. Economical constraints often lead to scarcity—at Dortheavej, we have managed to create added value for the individual as well as the community.

The stakeholders and their benefits

Major companies in the market offer new quality products and better services to customers in the modular construction market. They are:

  • Anderco Pte. Ltd
  • ATCO
  • Bechtel Corporation
  • Fluor Corporation
  • Giant Containers Inc
  • Lendlease Corporation
  • Modulaire Group
  • SG Blocks Inc
  • Skanska AB

Types of constructions

Prefabrication and Modular concepts are used in many types of construction projects, like:

  • houses
  • residential communities
  • hotels
  • hospitals
  • other facilities.

The supply chain

In prefabrication and modular construction, the supply chain reactions are more predictable than in traditional construction, as the construction process is centralized and:

  • uses standard materials
  • needs fewer materials
  • produces less waste.


In the construction industry labor shortage has been a trend for a while, but not as bad in the prefabrication and modular construction industry. The methods enable new employees to be easily trained on how to assemble standard modules. When trained they become efficient very quickly.

Benefits of prefabrication and modular constructions

Prefabrication and modular construction projects deliver:

  • agility
  • cost-effectiveness
  • sustainability
  • mobility, as they can easily be movable.

In conclusion

Prefabrication and modular constructions are very good at responding to changes in the construction industry as they provide high-quality and affordable options.

The popularity of prefabrication and modular construction will accelerate when:

  • heating ventilation and air conditioning systems will become standard in regions that experience extreme cold and hot conditions - constructions are more reliable in regions that are vulnerable to earthquakes.

Developers and contractors can recommend moving to prefabrication and modular construction when it is appropriate, so they can:

  • stay ahead of the competition
  • build faster, more sustainable, and more reliable constructions
  • reduce risk factors such as poor weather conditions or labor shortages
  • keep projects on budget
  • reduce material waste, labor, and transportation costs.

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