Dry Construction Market Analysis

Dry Construction Market (Global, 2023)

Introduction

Dry construction has been a leading trend in the construction industry for some time. Dry construction is characterized by a new approach to building and remodeling that emphasizes the importance of speed, economy, and sustainability. Dry construction is a market that includes many different materials and methods, such as gypsum systems, gypsum boards, and prefabricated systems, which are contributing to the rapid evolution of building methods. As the pace of urbanization accelerates and the demand for housing and commercial space continues to grow, dry construction is increasingly gaining in importance as a high-quality, low-emission building method. Furthermore, new technological developments are enabling the development of new solutions that are improving the performance and durability of dry construction systems, making them more attractive to builders and investors. The market is also shaped by the interplay of regulations, consumers’ preferences, and economic factors, which offer both challenges and opportunities for the companies operating in the dry construction value chain.

PESTLE Analysis

Political

In 2023, building regulations in several countries are increasingly promoting sustainable building. More than thirty countries have introduced stricter energy-saving building codes. For example, the European Union requires that all new buildings be almost zero energy by 2025. This directly affects the dry construction market, as it creates a greater need for new materials and methods. Also, the United States has allocated around $ 1 billion in subsidies to green building projects, which also affects the market.

Economic

The market for dry construction is influenced by the general economic situation. The amount spent on construction in the United States in 2023 will be $ 1,600 billion. This represents an increase of 5 per cent over the previous year. The increase will be mainly due to a boom in residential and commercial building. The labor market in the construction industry has improved, and about 7.5 million people will be employed in construction in 2023. This will lead to a healthy demand for dry construction methods, which often require less labor than the old methods.

Social

Towards sustainable and eco-friendly building solutions, the market is moving. According to the survey, 68 per cent of home buyers are willing to pay a premium for energy-efficient homes. This is especially true of millennials, who make up a large part of the home buyers. The growing awareness of indoor air quality has led to increased interest in dry building methods, which often use low-emission materials and therefore also correspond to the health-conscious attitudes of modern consumers.

Technological

In 2023 the use of BIM will increase by 25%. BIM is a technology that facilitates the planning and execution of building works, reduces waste and increases productivity. Prefabricated building methods have also become more common, and some 15% of all building projects already use prefabricated components. These parts speed up the building process and improve quality control.

Legal

A new regulatory framework is evolving to address these issues, and in public works at least 20 per cent of the materials used must be obtained from recycled or sustainable sources. This legal requirement forces contractors to adapt their methods, and the demand for materials used in dry construction increases. Moreover, compliance with safety regulations has become stricter, and fines for non-compliance can reach $500,000 in some jurisdictions.

Environmental

The construction industry is subject to the most careful scrutiny, as it accounts for some 39% of global carbon emissions. Many countries have therefore introduced stricter regulations, including the obligation to carry out an environmental impact assessment before any construction project commences. In 2023, it was estimated that over 40% of new building projects in the European Union were already using sustainable building practices, which shows the industry’s growing concern for reducing its carbon footprint.

Porter's Five Forces

Threat of New Entrants

In 2023, the dry construction market will be a moderate threat to new entrants. There is a high initial investment and the regulatory framework is complicated, but the growing demand for sustainable and efficient building methods will attract new players. However, the established companies with strong brand awareness and customer loyalty can also act as barriers to new entrants.

Bargaining Power of Suppliers

Suppliers in the dry construction market have little power because of the easy availability of raw materials and components. There are many suppliers, which reduces their ability to influence prices. Also, many companies can change suppliers without incurring significant costs.

Bargaining Power of Buyers

High—The buyers of the dry construction market are in a position of great power, having many alternatives to choose from, and can easily compare prices and quality. Competition among contractors and construction companies has also made buyers more sensitive to prices. The buyers are able to negotiate more advantageous conditions. Also, the trend towards specialization and the resulting demand for special project solutions gives the buyers more power.

Threat of Substitutes

The threat of substitutes in the construction industry is moderate. However, alternative building materials and techniques, such as 3D printing and prefabricated construction, are becoming more popular. Dry construction’s unique advantages, such as speed and efficiency, can help offset this threat somewhat.

Competitive Rivalry

Competition in the dry construction market is high, as there are many players vying for market share. It is characterized by rapid technological development and innovation, resulting in fierce competition among the companies. In the effort to differentiate their offerings and increase their efficiency, companies are constantly trying to improve their position, which leads to increased rivalry and price wars.

SWOT Analysis

Strengths

• Increased demand for sustainable and eco-friendly construction materials.
• Faster construction times compared to traditional methods.
• Lower labor costs due to reduced workforce requirements.
• High adaptability to various construction projects and designs.

Weaknesses

• Limited awareness and understanding of dry construction methods among traditional builders.
• Potential higher initial costs for specialized materials and technologies.
• Dependence on skilled labor for installation and maintenance.
• Vulnerability to fluctuations in raw material prices.

Opportunities

• Growing urbanization and infrastructure development in emerging markets.
• Technological advancements leading to innovative dry construction solutions.
• Government incentives for sustainable building practices.
• Expansion into renovation and retrofitting markets.

Threats

• Intense competition from traditional construction methods.
• Economic downturns affecting construction budgets and investments.
• Regulatory challenges and building codes that may not favor dry construction.
• Supply chain disruptions impacting material availability.

Summary

In 2023, the Dry Building Construction Market will be characterized by its strengths in terms of its sustainability and efficiency, which are in line with current trends in the construction industry. But the market is also characterized by the challenges of limited awareness and potential cost barriers. Opportunities for growth are offered by the development of emerging markets and the development of new technologies. On the other hand, competition and economic fluctuations can have an adverse effect on the stability of the market. Strategic emphasis on education, innovation and adaptability will be important to exploit the strengths and opportunities and to minimize the weaknesses and threats.