4 key stats on modular building in the UK

Modular homes hit the headlines this week thanks to a landmark ￡2.5bn joint venture between a UK Housing association and a state-owned Chinese construction company.

The China National Building Material Company (CNBM) will partner Your Housing Group to build 25,000 modular homes in the next five years, adding to their existing stock of 33,000 homes across the UK. The CNBM will also build six factories in the UK, creating an estimated 1,000 jobs.

Modular Building Stats:

1. 15,000 modular homes are built in the UK every year
2. The off site construction of buildings, building elements and structures is currently worth ￡2-3 Billion per year
3. Modular building accounts for around 2% of the total construction market
4. Modular construction’s market share is increasing by 25% per year.

Our view:

We are encouraged by anything that improves the output of housing in this country, but we view the ‘25,000 homes in five years’ figure in the above story with a degree of cynicism. Will there really be enough available sites to build this volume of modular housing in the next five years? While the design and build process of modular housing may have developed rapidly in recent times, there’s very little evidence to suggest that planning and land acquisition has evolved at the same rate.

Bold predictions

With there being approximately 15,000 modular homes constructed in the UK each year, this deal will, in theory, account for a quarter of all annual modular builds. The concept of off-site modular construction resulting in a quicker, less disruptive process has already been embraced by the hotel industry, so it is an entirely plausible solution for PRS development, if only there was the land to build it on.

Post-Brexit agenda?

Another interesting aside to the story is the government’s strong backing of the deal. In the wake of Theresa May’s recent visit to China, the timing of this announcement couldn’t be more convenient for a government under fire about the future of international trade post-Brexit.

Whatever the government’s motives may be, 1,000 new jobs is of course welcome news, but despite the fact that there will soon be six factories developing modular housing in the UK, we remain doubtful that these factories will form a significant part of future development in this country. Firstly because of the availability of sites and secondly because this deal looks like a one-off, rather than something that’s part of a joined-up housing development policy.

Originally published on prsinvest.com