The Outlook for Modular and Offsite Post-Covid

Views: 7     Author: Site Editor     Publish Time: 2020-07-30      Origin: Site

The impact of Covid-19 on the economy is still highly uncertain. Several economic forecasters have put a wide range of predictions in the public realm. Most assumed a deep contraction in Q2 2020 of from 5% up to as much as 35% followed by a rapid recovery and a return to near previous levels of output by the end of 2020. Almost every part of the economy has been impacted in some part by the global pandemic.

AMA Research has been following the goings-on throughout lockdown and now into the easing. Among the gloom, we’re seeing there may in fact be several sectors that will see an upturn following on from the pandemic and assisting the UK find its “new normal”.

Prefabricated volumetric building systems

Prefabricated building systems is one such sector. Permanent volumetric building systems were estimated to account for around 40-45% of total market by value at MSP. Would the addition of current social distancing measures only increase this? The ability to turn up on site with a structure almost entirely ready to go can only help when keeping workers apart.

The biggest market for volumetric products is temporary accommodation on construction and industrial sites and event hire, which is worth around £350m-£380m annually. Though events are down, some short-term demand from the health and possibly the grocery sector to expand consumer capacity through the pandemic timeline may also be in demand. Growth may also come from some bounce back for the construction sector after the restrictions are lifted and longer-term, the outlook for the volumetric sector is positive.

It is forecast that the market will grow by 14% between 2020 and 2024. This is down to an increasing number of public sector procurement frameworks that include several key modular building contractors, and an increasing use of Building Information Modelling. More importantly, there is now a strong likelihood of an increase in the use of volumetric and other types of offsite construction methods to help meet the chronic housing shortage and cope with the lack of traditional construction skills within the industry. By 2024, the housing sector is expected to account for 12%-14% of market value, up from 9%-11% in 2019.

Hayley Thornley, the editor of the Prefabricated Volumetric Building Systems Market Report, said: “The outlook for the volumetric building systems market remains difficult to predict given the lack of published data in this sector and the continued uncertainty, not only the construction sector but also the wider UK economy. Steady growth in this market is expected over the next few years to 2024, underpinned by the increasing use of offsite construction methods to help meet the chronic housing shortage and cope with the lack of traditional construction skills.”

Offsite housing construction

All methods of offsite housing construction look set to grow in a post-pandemic world. Demand will be driven by several factors: the ongoing shortage of homes across England, which has certainly had a pause put on through the pandemic and lockdown. The declining numbers of key skilled tradesmen and professionals, which in turn increases demand in offsite housing manufacturing and output capacity. This is assisted by the number of systems with quality assurance.

Key areas of demand are likely to be where there is an urgency to increase the rate of completions – eg affordable housing – and where offsite methods are particularly well suited, eg Build-to-Rent. This could almost certainly be a consideration as demand increases as lockdown eases.

Other than timber frame, the use of other offsite technologies for housing has been limited. From 2019, however, demand for and supply of volumetric and closed panel systems should grow. There are a number of big-name key players in this sector including Legal & General, Laing O’ Rourke and Urban Splash.

There are also new superstructure materials being brought to market, eg autoclaved aerated concrete (AAC) and composite material, such as Tufeco, a monolithic panelised system of polymer concrete derived from silica extracted from glass recyclate. A core driver underpinning growth is the significant increase in third party investment, eg from Goldman Sachs, leading Japanese offsite housing manufacturer Sekisui House and housing developers such as Barratt Homes and Berkeley Group.

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