Impact of COVID – 19 on Modular Construction Industry
The construction industry has witnessed high growth due to the increasing demand for infrastructure and buildings in emerging economies. However, for the past decade, the construction industry has lagged behind the other sectors in terms of productivity. The increasing housing activities and growing number of residential, non-residential, and infrastructure projects due to growing urbanization and rising population primarily driving the demand for less time consuming and more effective construction techniques. This has led to for shifting from traditional onsite projects to offsite manufacturing-style production. The modular construction is attracting a fresh wave of interest and investment on the back of changes in the technological and economic environment.
Modular housing is quickly becoming one of the fastest-growing sectors of the construction industry. However, the industry is facing challenges due to the outbreak of COVID-19. Most of the housing projects will remain under construction due to supply chain destruction, cash flow constraints, and production shutdown. In India, more than 15.62 lakh units (which are launched between 2013 till 2019) are under construction in the top seven cities of India. Also, there is almost zero construction activity at the project sites, which has further put a strain on several manufacturers, developers’ financial health. Though the demand for affordable modular construction in single-family and multifamily housing had increased in recent times, this pandemic created a major setback for the primary sector, which was already staggering under crisis.
Amid the COVID-19 outbreak, laborers fled to their respective native lands. With a shortage of labor, the timely completion of projects will also become a major challenge for modular construction developers. Also, due to supply chain disruption, developers are facing a problem in acquiring cheap input material as the manufacturing units are closed.
Apart from these above-mentioned factors, consumer purchasing behavior will also impact the overall modular construction market, as consumers are not willing to invest in housing project owing to their limited income and fears of unemployment, modular housing buyers will delay their purchasing decisions, which leads to rise in unsold stocks. Therefore, looking at the current scenario due to this pandemic, modular construction housing will not remain so affordable for the stakeholders.
FDI INVESTMENT IN TOP COUNTRIES, 2016–2019 (USD MILLION)