Modular construction is a form of off-site construction in which buildings are put together by connecting a series of large pre-built blocks, or “modules.” These modules are constructed off-site under controlled plant conditions before being transported and assembled on-site. This research focuses on volumetric modular construction, a type of off-site construction wherein buildings are constructed by connecting and integrating pre-built three-dimensional sections. This elevated degree of module completion prior to on-site installation sets volumetric construction apart from traditional and two-dimensional prefabricated construction in terms of speed of project delivery and labour needs. We have segmented the identified European modular construction businesses by designated end-market applications into: (i) mixed, (ii) commercial & public and (iii) residential.

The European modular construction market remains highly fragmented with top-10 players holding a cumulative share of ~15-20%. The competitive landscape includes several large players, such as Modulaire Group, DFH Gruppe and Portakabin, as well as hundreds of smaller players with single-digit revenues. Most competition takes place within regional and national borders as internationalisation is inhibited by regional construction regulations, electricity network specifications and high transportation costs. Although industry executives believe that the market is approaching pan-European consolidation, with ~5-6 players dominating the markets in the decades to come, most incumbents currently mainly touch domestic grounds only. Nevertheless, the current market environment makes it easier for larger businesses to gain market share, with tightening costs, lower valuations and increased risk of bankruptcies of smaller players.

Investor-led interest has been strong, with >50% of identified European players being sponsor-backed (February 2024). Investors are attracted to the long-term modular construction adoption amid the European housing and construction labour shortages. At the same time, off-site construction significantly outperforms the traditional construction value chain in terms of ecological footprints, further driving the long-term demand for modular projects. On the downside, slow-growing adoption rates stemming from conservative consumer perceptions, the lack of customisation/bespoke construction offerings and risky financial profiles which may lead to insolvencies, serve as the key deterrents for financial sponsors.

ESG topics primarily relate to environmental and social issues. From an environmental perspective, modular players have crucial advantages over traditional construction peers in terms of carbon emissions. Herein, modular buildings can be sustainably produced due to the precision manufacturing of components inside a controlled factory environment, thereby ensuring less waste and energy efficiency maximisation. On the social side, modular construction companies contribute positively by delivering time- and cost-efficient housing projects, as well as by partially resolving labour shortages.