Modular & Prefabricated Construction Market Strengthened by Labor Shortages

 Future Market Insights (FMI) reports that the global modular and prefabricated construction market is on a trajectory of sustained expansion, forecast to grow from USD 173.5 billion in 2025 to USD 302.0 billion by 2035, registering a steady CAGR of 5.7%. The sector’s growth is fueled by increasing demand for efficient, sustainable, and rapid construction solutions across major economies — notably in Asia-Pacific (APAC), Europe, the United States, and Saudi Arabia.

As global construction transitions toward offsite methodologies, modular and prefabricated systems are becoming central to addressing urban housing shortages, cost inflation, and project delays. FMI’s data-driven insights reveal a rise in adoption across residential, commercial, and industrial projects, marking a pivotal shift toward factory-built construction models that prioritize speed, scalability, and quality control.

Consistent Global Growth Supported by Sustainability and Efficiency Goals

According to FMI’s latest forecast, market value is projected to reach USD 183.4 billion in 2026 and USD 228.9 billion by 2030, supported by strong demand for modular units in urban redevelopment, healthcare, and educational infrastructure. The integration of Building Information Modeling (BIM), digital twin technologies, and sustainable material usage has become a defining feature of the sector’s evolution.

By reducing construction waste, optimizing energy performance, and enhancing project delivery timelines, modular systems are aligning with global climate and green-building objectives. Governments across key regions — particularly in China, India, Germany, the U.S., and Saudi Arabia — are advancing initiatives to promote prefabrication in public infrastructure and affordable housing.

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Regional Outlook: Distinct Growth Drivers Across Key Markets

Asia-Pacific (APAC): Innovation and Policy Support Driving Record Expansion

FMI projects China to record a 7.7% CAGR and India at 7.1% through 2035, the highest globally. In China, large-scale urbanization projects and government mandates for prefabrication continue to shape demand, with steel and concrete modular units dominating the landscape. Meanwhile, India’s modular expansion is backed by government housing schemes such as Pradhan Mantri Awas Yojana, which emphasize affordability, sustainability, and rapid deployment.

Manufacturers across APAC are investing in automation, smart components, and hybrid materials to improve structural integrity and cost efficiency. This region remains the largest revenue generator, accounting for over 40% of total global market share by 2035, according to FMI’s analysis.

Europe: Sustainability Mandates and Technological Leadership

Europe’s modular and prefabricated construction market demonstrates a robust transition toward green and energy-efficient building practices. FMI highlights Germany (6.6% CAGR) and France (6.0%) as leading adopters, driven by cross-laminated timber (CLT) systems and eco-friendly housing programs. Germany’s focus on automation and BIM-driven design precision has accelerated offsite production efficiency.

The United Kingdom, expected to grow at 5.4% CAGR, is rapidly deploying plug-and-play modular systems across urban redevelopment and public infrastructure projects. FMI notes that hybrid modular systems — combining steel, timber, and 3D-printed components — are reshaping the future of sustainable architecture in Europe.

United States: Accelerating Adoption in Healthcare and Urban Housing

In the U.S., modular construction is gaining traction as developers seek solutions to labor shortages, rising costs, and project delays. The adoption of prefabricated healthcare units, classrooms, and modular housing is accelerating nationwide. FMI observes increasing investment in AI-enabled manufacturing, automation, and digital design integration, ensuring precision and scalability across large-scale projects.

Federal and state-level affordable housing programs continue to support prefabricated development, positioning the U.S. as a strategic hub for innovative modular technologies and hybrid construction models.

Saudi Arabia: Strategic Investments in Prefabrication and Mega Projects

Saudi Arabia’s market momentum is strengthened by its Vision 2030 initiatives, prioritizing smart city development and sustainable infrastructure. Prefabricated and modular systems are being rapidly integrated into mega-projects such as NEOM and housing expansions under the Ministry of Housing. FMI identifies steel-based modular solutions as key enablers of rapid urban transformation and cost efficiency in the region.

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Segmental Insights: Steel and Permanent Modular Solutions Lead

By product type, the Permanent Modular Construction segment accounts for 61.3% of total market share in 2025, reflecting growing confidence among developers in structural reliability, regulatory compliance, and long-term durability.

By material, Steel dominates with 47.8% market share, driven by its strength-to-weight ratio, recyclability, and adaptability for large-scale prefabrication. The Multi-family Residential segment remains the leading application area, accounting for 33.6% of total market value in 2025, as urban developers favor modular methods for speed, affordability, and quality control.

Key Trends Shaping the Market

• Hybrid modular systems are enabling construction of high-rise and mixed-use developments by combining steel, concrete, and composite materials.
• Digital transformation through BIM and automation enhances design accuracy and project efficiency.
• Government incentives and green building mandates are catalyzing modular adoption across developed and emerging economies.
• Sustainability goals and circular-economy frameworks are encouraging use of recyclable and renewable materials.
• Logistical optimization is emerging as a crucial focus area as firms streamline transport and assembly processes for large modules.

Competitive Landscape and Future Outlook

According to FMI, the global modular and prefabricated construction industry remains moderately consolidated, with firms prioritizing automation, robotics, and digital fabrication to improve precision and reduce waste.

Companies operating in this market are investing in AI-driven design tools, advanced materials, and green-certified construction systems to enhance competitiveness. FMI anticipates that hybrid modular strategies will redefine project execution models across residential, healthcare, education, and industrial infrastructure over the next decade.

With increasing adoption across APAC, Europe, the USA, and Saudi Arabia, modular and prefabricated construction is set to become the cornerstone of next-generation global infrastructure, balancing speed, sustainability, and scalability.

About Future Market Insights (FMI)

Future Market Insights, Inc. (FMI) is an ESOMAR-certified, ISO 9001:2015 market research and consulting organization, trusted by Fortune 500 clients and global enterprises. With operations in the U.S., UK, India, and Dubai, FMI provides data-backed insights and strategic intelligence across 30+ industries and 1200 markets worldwide.

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