Modular construction market: Trends and growth prospects

Over the years, the modular construction market has emerged as a better alternative to conventional on-site construction. Especially for offering advantages such as cost savings and more environmentally friendly solutions.

Because of these advantages, commercial and residential industries are increasingly adopting modular construction for their projects, taking advantage of it even in specific parts of their projects as in the case of prefabricated bathrooms.

The modular and prefabricated construction market is expected to witness significant growth over the next five years.

Let’s review the trends and growth prospects of the global modular construction market.

Modular construction market size

In 2020 the global modular construction market was valued at $44 billion. And in 2021 at $87 billion.

The forecasts indicate a CAGR (compound annual growth rate) of more than 12% from 2021 to 2026.

The modular construction market is expected to grow quickly, especially in developing countries, as this type of construction is being widely used in these regions to renovate existing buildings.

According to Market Research Future (MRFR), this market will have a compound annual growth rate of 5.95% during the forecast period ending in 2023. And, in that period, its market value will reach $154 billion.

It is also estimated that by 2025 the value of the global modular construction market will reach US$175 billion.

Construction Market. Photo by Scott Blake on Unsplash

Current characteristics of the global modular construction market

In 2018 the modular construction market concentrated about 50% share of the total global market in Europe and North America alone.

However, Europe is still a developing market. In Spain, for example, it is below 1 % within the construction sector, in the United Kingdom, it is 7 % and in Germany, it is around 9 %.

However, in other European countries such as The Netherlands, the market penetration of modular construction is high, reaching close to 50%.

Regional markets: China and India

The Asia-Pacific region (especially China and India) is projected to grow at a rapid pace in the coming years because of the increasing demand for green buildings.

Other factors such as high investment costs are also driving the modular construction market in this region of the world.

It’s worth mentioning that the Asia-Pacific region is expected to grow to reach a higher CAGR than Europe or North America due to the presence of emerging economies.

This can be attributed to different factors in developing countries, such as lower labour costs, difficulty in acquiring land, and the availability of limited raw materials.

China accounts for about 20% of all global construction investments. It is estimated that the Asian giant will spend around 13 billion dollars in this sector by 2030, with a large part of this budget allocated to the modular construction market.

Keys to the boom and growth of the modular and prefabricated construction market

Growing demand in the affordable housing construction market has led to increased adoption of modular construction methods in all regions of the world.

Modular construction is also beneficial for companies because it allows them to meet their project deadlines with minimal disruption to their operations.

As mentioned earlier, the global modular construction market has experienced rapid growth in recent years due to its diverse advantages over traditional on-site construction.

Among the most outstanding advantages are the greater cost savings due to its rapid implementation and the significant reduction in construction time, in addition to minimum waste generation during assembly activities.

Additionally, it helps reduce labour costs while improving quality control measures at all stages of project execution without compromising project timelines.

The reason behind it is that offsite construction is carried out in controlled factory environments, which ensures that strict quality standards and all specifications requested by the customer are met.

Hotel Bathroom Pods - Hotel Grand Luxor Terra Mítica All Suites

Main sectors in which modular construction is being developed

The modular construction market has penetrated several industries within the global construction market, such as the commercial and residential sectors. In these areas, modular construction is increasingly used in projects related to healthcare, hospitality, retail, education, and public administration.

This type of construction is used for residential buildings such as single-story units or multi-story apartments/condominiums, commercial properties such as offices or retail stores, and also in hotels and resorts. It can be applied to the entire project or a specific part of it.

For example, at Hydrodiseño we are expert manufacturers of prefabricated bathrooms with extensive experience in the industry. We offer a cost-effective alternative, which reduces installation times and guarantees quality and cost savings.

Among our most outstanding projects we can mention the following:


Healthcare and education sector

Modular construction is also present in the healthcare sector, as modular buildings can be used in hospitals or clinics.

In addition, the cost-effectiveness and efficiency of modular constructions have led to the implementation of the modular construction market and its solutions in educational institutions.

These institutions need to create new classrooms or even entire schools without having to close current operations during project development. And in this regard, modular construction is an excellent alternative.

As we have seen, the modular construction market is booming, and the growth prospects for the coming years are favourable thanks to the advantages offered by this type of prefabricated construction.

If you are interested in including modular bathroom and kitchen construction in your project and would like to learn more about the processes and systems we use at Hydrodiseño, please feel free to contact one of our expert consultants by clicking here.

Sources consulted: