Brief analysis

Attractiveness of the modular construction segment for investors

The market for modular room systems based on containers has seen above-average growth in recent years, driven by sustained volume and price effects.
 
Adjusted for the one-off effect of the refugee crisis, which caused demand for temporary buildings to skyrocket in the short term, the volume is mainly driven by the maturity of the product itself and general construction activity: Sustainable new construction and refurbishment activity in Germany requires high-quality temporary space solutions (for schools, administrative buildings, offices, etc., which need to be refurbished over longer periods of time) on the one hand, and flexible, longer-term construction solutions/ modular construction on the other (particularly in the area of schools, which often need to be expanded or downsized depending on the year cohort).
The technological development of container construction offers suitable solutions for both applications, as fire protection, energy efficiency and high-quality façade design, for example, can now be easily realised. In addition, room solutions and modular buildings made from containers can be erected very quickly with little personnel and administrative effort - a not insignificant advantage, especially in times of a shortage of skilled labour.

The price trend is also pointing upwards: As the regulatory and customer requirements in terms of energy and fire protection certificates, room height, technical building equipment and façade design are becoming increasingly demanding, the price level is also rising. This is particularly evident in the modular construction segment, where the requirements are even higher (due to the longer-term perspective).

The segment is certainly exciting for investors, as the market is very fragmented despite major players such as Kleusberg, Alho/Fagsi etc., process inefficiencies are widespread and there is significant room for improvement in terms of professionalisation in market cultivation. Despite the CAPEX intensity, there is potential for scaling, as regional projects can be acquired, planned and implemented by individual planners/project managers, while scheduling and work preparation can be carried out at the head office or by a service provider. Clear positioning, efficient processes and stringent market development can reduce complexity and create a powerful, centralised delivery structure.

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Christoph Blepp
Christoph BleppManaging Partner

Christoph is a founding partner of S&B Strategy GmbH and is responsible for strategy development and implementation.

He has 17 years of experience as an officer, strategy consultant and managing director, gained at PwC Deals Strategy, smaller consultancies and the German Armed Forces. He studied Political Science and Economics at the University of the German Armed Forces in Munich and completed an MBA at WFI.