Prefabricated Construction Growing in Popularity

Published On
Jun 15, 2016

According to a recent report published by Technavio (, a global technology research and advisory firm, the global prefabricated construction market is expected to grow at a compound annual growth rate (CAGR) of between 6 and 7 percent until 2020. Technavio values the prefabricated construction market at about $79 million in 2015 and expects it to reach over $110 million by 2020.

Why is the technology gaining popularity? There are several reasons, most related to energy savings, both in the manufacturing of the units, as well as with the final products in place.

That is, according to the report, construction companies around the globe are focusing on minimizing their energy consumption levels. Many are seeking to achieve green building certifications, such as LEED (the U.S. Green Building Council's certification) and BREEAM (the U.K.-based Building Research Establishment Environmental Assessment Method).

Construction companies are finding that prefabricated construction not only helps to reduce waste of construction materials during building projects, but also can incorporate technologies that automatically lower the energy consumption in the buildings once they are in use.

One growing trend that is making prefabricated construction even more popular is the growth of "smart cities." A smart city is an urban development concept that integrates multiple information and communication technology solutions in a secure fashion to manage a city's assets, such as departmental information systems, schools, libraries, transportation systems, hospitals, power plants, water supply networks, waste management, law enforcement and other community services.

These days, advocates of smart cities are finding the energy efficiency benefits of prefabricated construction to be very appealing.

"Smart cities are a pioneering concept that provide a sustainable and efficient environment within buildings," said Soumya Mutsuddi, a lead industry analyst for construction research at Technavio. "They have attained great popularity in developed as well as developing countries due to their ability to optimize energy-efficiency and improve security and facilities. Since prefabricated construction helps to achieve energy efficiency and waste management, these units are being widely used for the construction of smart cities across the globe."

Also spurring the growth of prefabricated construction is the industry's introduction of building information modeling (BIM), which is creating efficiencies in the manufacturing of the units.

“The application of BIM in prefabricated construction is rapidly gaining popularity owing to its multiple benefits," said Navin Rejendra, lead analyst with Technavio's Heavy Industry segment. "The usage of BIM in construction activities helps to ease the design flow and provides data-centric information based on the design, specification and construction issues. Additionally, the ability of BIM to track time, errors, and the cost is expected to result in market growth during the forecast period."

According to the report, the growth of the prefabricated construction market in a region is directly proportional to the growth of the overall construction market in that region. To fulfill the demand for residential and commercial space in the U.S. market in particular, construction companies are developing many high-rises for residential and commercial segments. As of 2014, for example, New York City was estimated to have the highest number of high-rise buildings—almost 6,000. In 2015, nearly $100 billion (USD) was envisioned for the U.S. commercial sector alone.

Currently, according to the report, there are five major players in the prefabricated industry: ACS Group, Balfour Beatty, Bouygues Construction, Julius Berger and Komatsu House.

"However, there are a large number of small, domestic, country-specific vendors in the market as of 2015 that are also providing prefabricated building components," Mutsuddi said. "These vendors are offering affordable solutions to SMEs [small and medium-sized enterprises] and small construction companies and developers that engage mainly in small-scale residential development projects."

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