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The modular housing segment has been growing at a significant rate across the European markets, especially in the United Kingdom. The demand for affordable homes, driven by a surge in interest rates and inflation, is aiding the growth of the sector in 2023. This has resulted in many prefabricated developers raising funding rounds from venture capital and private equity firms.
TopHat, one of the leading prefabricated developers in the European region, announced that the firm had raised £70 million in a funding round in April 2023. The growth round was led by investors including Aviva Capital Partners and Persimmon. The funds were raised to accelerate the construction of a modular housing factory in Corby, Northamptonshire. From the proposed factory, TopHat aims to produce up to 4,000 low-carbon homes.
ilke Homes, is notably, over two months late in filling its accounts. To avoid the inclusion of material uncertainty statements in delayed annual accounts, the firm is now seeking a potential investor(s). As reported by ilke Homes, the firm has been aiming to close the funding round ever since it raised £100 million last year. However, the proposed partner pulled out of the deal shortly before the completion in March 2023, due to internal reasons.
Unlike TopHat, ilke Homes are raising the funding round to boost the balance sheet and investor confidence, amid the uncertain macroeconomic environment. Following the closure of L&G Modular in 2023 and the collapse of Urban Splash’s venture with Sekisui in 2022, the funding round can further boost investor confidence.
Despite the concerns, ilke Homes have been able to deliver strong operational performance. The firm revealed that it has delivered 700 homes in the fiscal year ending March 2023 and has a strong pipeline of 4,000 homes worth over £1 billion in turnover. According to ilke Homes, the accounts when released will reveal £100 million in revenue in the year to March 2022, which is three times more than the year before. However, the firm will still be making a loss. This shows that the firm needs to be at a greater scale to achieve profitability going forward. The £100 million raised by ilke Homes, in December 2022, will enable the firm to boost its production capacity.
A lot of players, worldwide, are seeking to boost their production capacity in the modular housing segment. In the United States, Plant Prefab raised a funding round in 2022 to develop a manufacturing facility. ADMARES, the Finnish manufacturer of modular homes, announced that the firm is planning to open a new facility in Georgia, United States.
To tap into the growing modular housing construction market worldwide, ADMARES is planning to build six smart factories worldwide. The facility in Georgia will be one of the six that the firm has planned to build over the next few years.
Samsung C&T, the Korean construction firm, is also making big strides in the prefabricated construction space. The firm had announced plans to build factories in Latin America and Saudi Arabia to strengthen its position in the fast-growing sector over the next three to four years.
Going forward, ConsTrack360 expects the trend to further continue as more modular housing providers seek to expand their production capacity and meet the growing demand for prefabricated homes. The rising investment in the sector, coupled with strategic collaborations, means that the inventory of modular houses will grow significantly over the next five years. Furthermore, the higher interest rates environment and inflationary pressures mean that more buyers will shift towards modular solutions to access affordable housing units. All of these factors indicate that the global prefabricated industry is poised for an accelerated growth trajectory from the medium to long-term perspective.
To know more and gain a deeper understanding of the prefabricated construction market in the United Kingdom, click here.
