KSA Modular Construction Market Outlook to 2030

KSA Modular Construction Market Overview

• The KSA modular construction market was valued at USD 300 million in 2023. This growth is driven by several factors, including the increasing need for efficient construction solutions, the government's focus on infrastructure development under Vision 2030, and the rising demand for residential and commercial spaces due to urbanization.
• The key players in the KSA Modular Construction Market include Red Sea Housing Services, Almoayyed Contracting Group, Dorce Prefabricated Building & Construction, Gulf Modular Group, and Katerra. These companies have established a strong presence in the market by offering innovative and customized modular solutions that cater to the diverse needs of the KSA construction sector.
• In 2023, Katerra secured a contract worth SAR 750 million to construct a series of modular schools across Riyadh. This project aims to address the growing demand for educational facilities and utilizes Katerra's state-of-the-art modular construction technology to ensure high-quality standards and expedited delivery.
• In 2023, Riyadh, the capital city of Saudi Arabia, dominated the modular construction market in the region, driven by the city's rapid urbanization, infrastructure development, and the implementation of several large-scale residential and commercial projects.

KSA Modular Construction Market Segmentation

KSA's Modular Construction market is segmented into product type, material type, and region.

• By Product Type: The KSA Modular Construction Market is segmented by product type into Residential Buildings, Commercial Buildings, and Industrial Buildings. In 2023, the residential buildings segment holds the dominant market share in the KSA modular construction market. This dominance is attributed to the high demand for affordable housing solutions driven by the growing population and urbanization.

• By Material Type: The market is segmented by material type into steel, concrete, and wood. In 2023, Steel is the dominant material type in the KSA modular construction market. The preference for steel is due to its strength, durability, and flexibility, which make it suitable for a wide range of construction applications.

• By Region: The market is segmented by region into North, South, East, and West. In 2023, the northern region of Saudi Arabia, including cities like Tabuk, dominated the market. The region's growth is driven by the Neom project, which aims to create a technologically advanced and sustainable city.

KSA Modular Construction Market Competitive Landscape

• Red Sea Housing Services: In 2024, Red Sea Housing Services announced the expansion of its manufacturing facility in Jeddah, with an investment of SAR 200 million. This expansion aims to increase the production capacity of modular units to meet the rising demand from residential and commercial projects.
• Dorce Prefabricated: In 2023, Dorce Prefabricated introduced a new range of eco-friendly modular homes, incorporating advanced insulation materials and energy-efficient designs. This innovation is expected to reduce energy consumption by 30%, aligning with the global trend towards sustainable construction practices.

KSA Modular Construction Market Analysis

KSA Modular Construction Market Growth Drivers:

• Infrastructure Development Projects: In 2024, the KSA government allocated around SAR 50 billion for various infrastructure development projects, including smart cities and transportation networks. This investment is driving the demand for modular construction methods, which offer faster and more efficient building solutions.
• Housing Initiatives: The Saudi Ministry of Housing has planned to develop over 1.5 million housing units by 2025 as part of the Vision 2030 initiative. This large-scale housing project necessitates the adoption of modular construction to meet the tight deadlines and cost constraints. The Sakani program alone is expected to utilize modular construction for 500,000 housing units by 2025.
• Industrial Growth: The industrial sector in Saudi Arabia is expanding with investments totalling SAR 20 billion in 2024 for the development of industrial zones and logistic hubs. Modular construction is being increasingly adopted in these projects due to its ability to provide scalable and adaptable building solutions.

KSA Modular Construction Market Challenges:

• High Initial Investment: Modular construction requires substantial initial investment in manufacturing facilities and technology. In 2024, the cost of setting up a modular construction plant in KSA was estimated to be around SAR 500 million. This high upfront cost can be a barrier for new entrants and small-scale construction firms, limiting market expansion.
• Cultural and Market Acceptance: Traditional construction methods are deeply ingrained in the Saudi construction industry. Convincing stakeholders and clients to adopt modular construction techniques remains a challenge. Despite its benefits, there is still scepticism about the quality and durability of modular buildings among certain sections of the market.

KSA Modular Construction Market Government Initiatives:

• Neom Project: The Neom project, a futuristic mega-city with a budget of SAR 1.9 trillion, is a flagship initiative under Vision 2030. Modular construction is a key component of this project, which aims to create technologically advanced and sustainable living and working spaces. The project is expected to generate substantial demand for modular construction over the next decade.
• Industrial Development Strategy: The Saudi Industrial Development Fund (SIDF) has launched a new strategy to support the growth of the industrial sector with a focus on modular construction. In 2024, the SIDF allocated SAR 10 billion in loans and grants to companies adopting modular construction techniques for industrial projects, promoting innovation and efficiency in the sector.

KSA Modular Construction Future Market Outlook

KSA's Modular Construction market is expected to grow in the coming years. The market is also likely to shift towards more organized with established players and online platforms expanding their reach.

KSA Modular Construction Future Market Trends:

• Increased Adoption of Smart Technologies: By 2028, the integration of smart technologies in modular construction will become more prevalent. IoT-enabled modular units will offer enhanced energy efficiency, security, and comfort, making them an attractive option for residential and commercial projects.
• Expansion of Modular Industrial Buildings: The industrial sector's growth will spur the demand for modular construction in manufacturing, logistics, and warehousing. By 2028, the modular industrial buildings market in KSA is projected to grow substantially, driven by the need for scalable and adaptable construction solutions in the industrial sector.