The Future of UK Modular Construction: Growth, Challenges & Opportunities

The UK panelised modular buildings market is undergoing a significant transformation. While economic challenges and material cost increases have tempered growth in recent years, the sector remains a critical driver of modern construction.

Panelised modular systems, particularly timber frame and hybrid MMC solutions, are well-positioned to support the government’s ambitious target of delivering 1.5 million new homes by 2029. At the same time, public sector investment in education, healthcare, and infrastructure projects continues to provide a strong foundation for demand.

To celebrate the launch of the ‘Panelised Modular Building Systems Market Report UK 2025-2029’ Editor, Anne Williams has shared just some of the insight from the report below.

Market Value & Growth

The UK panelised modular buildings market was valued at £1.26bn in 2024, with timber frame accounting for ~70% of the market.

Government Housing Targets Driving Demand

Housing remains the largest sector (43% of total construction output), with modular solutions playing a key role in delivering 1.5 million new homes by 2029. Timber frame, LGSF, and hybrid MMC systems are at the forefront of this expansion.

Public Sector Investment Boosting Modular Adoption

Major government-funded projects include:

• £2.3bn for new prisons (40,000 additional bed spaces planned).
• 518 schools under the School Rebuilding Programme (SRP).
• £1bn for hospital refurbishments, plus £102m for GP surgery upgrades.

Private Sector Trends & Challenges

Private commercial construction (21% of new work) is a key growth area, covering offices, hospitality, and private student accommodation.

Sustainability & Market Consolidation

Net Zero targets and ‘green grants’ are accelerating investment in energy-efficient modular solutions.

Market consolidation is expected, as some modular firms struggle with financial pressures, leading to acquisitions and mergers.

Editor’s Quote

“One of the key trends emerging from this report is the increasing role of sustainability in modular construction. With Net Zero targets shaping procurement policies, we’re seeing a growing emphasis on energy-efficient materials and offsite manufacturing processes that minimize waste and carbon emissions. Timber frames continue to dominate, accounting for around 70% of the market, but light gauge steel frames (LGSF) and cross-laminated timber (CLT) are also gaining traction as part of hybrid solutions.

While the market faces challenges  including supply chain constraints, taxation pressures, and labour shortages—there is strong long-term confidence in modular construction. Major housebuilders are investing in timber frame production, and we expect continued market consolidation as companies adapt to evolving industry demands. This report provides crucial insights for businesses looking to navigate these challenges, seize new opportunities, and position themselves for sector growth.”