“The UK construction industry is one of the last to embrace modernisation, while we are all using smartphones, construction is still pretty much the same as it was during Roman times.” Mark Farmer, Cast Consultancy
Momentum will clearly continue to grow in 2019 in Off-Site Manufacturing (OSM). With most UK housebuilders delivering at least one development with an element of modular construction. As the annual number of new modular homes is only standing at 15,000 it is difficult to see how we will reach the government’s target of 100,000 by 2020 without significant overseas support chasing the most suitable OSM’s.
Considering a shortfall of 4m homes it is time now surely accelerate not only our build methods technically but to encourage more property development debt providers to enter the market. As far as mortgages, over 25 High Street lenders are participating, coupled with Housing Associations & Local Authorities under increasing pressure to house people.
Modular is not suitable for all development projects but the use of state of the art Hybrid systems combined even with traditional build are proving to be more popular
Challenges to overcome for overseas OSM’s;
- Clients fear based on a bad experience or perhaps more like pre-conceived ideas (going back to War Torn Britain in the 1950’s) with existing strong relations in place with suitable supply chain which I consider the real problem here. Taking in to consideration rapid growth the UK’s OSM’s can possibly provide no more than 4% of the UK’s housing requirement. It is a ‘cottage industry’ albeit 4 relatively large (in UK terms) reputable volumetric firms and one large bathroom pod facility with capability for 20,000 units per year. So despite concerns from very few UK clients there is evidently huge potential for overseas OSM’s to prove themselves with expansion on the basis of sheer production capacity & absolutely decades of experience
- OSM’s lack of investment – albeit high successful in their own territory they are not always in a position to fund cashflow to support projects over a certain financial level. With a weak ‘balance sheet’ in place, lack of experience locally without UK delivery partners it will be challenging. As the old saying goes “Nobody got fired for hiring IBM” so clients take the easy and somewhat sensible option to stick to far more financially robust proven OSM providers or revert back to traditional build
- Upper hand being taken either by the client or the OSM, either which one considering themselves to be more important than the other, and not collaborating as necessary creating strong long-lasting partnerships – it’s all about collaboration!
- Development funding issues due the nature of being ‘Off-Site’ until delivered on site Debt lenders slow coming to the table.
Swan Housing invested £100m regenerating Basildon’s former 1960s Craylands Estate, which the provider is delivering in partnership with Basildon Borough Council and the Homes & Communities Agency (HCA). They say their factory will be capable of producing around 300 homes per annum using cross laminated timber (CLT) when at full capacity. Swan has a development pipeline of 3,500 homes.
I’ve produced a series of blogs on OSM on LinkedIn, see one of my last of 2018