BUILD Q4 issue

31 Q4 2018 Build with growing political pressure and a need to make houses more affordable means that the drivers for change are nearing alignment. An interesting example is in Japan, which was originally stimu- lated by a huge shortage of housing post World War II. It has high population density and expensive real estate, however, 25% of all homes are modular and built in a factory and tend to be replaced every 25 years. This may be a step too far for the UK at the moment but is an example of the direction of travel that the UK needs to take. Once momentum picks up for manufactured housing, and such construction becomes a “norm,” we believe there will be a race for firms to develop or acquire these capabilities. In particular, this technology will offer major advantages to the burgeoning build-to-rent sector meaning investors start earning income sooner – boosting overall returns. As with all disruptions, for early adopters there will be risks. Whilst first-movers will have the potential to realise significant gains, they will also carry the risk of making the market work and of selecting the right technology. A number of false starts have been witnessed and only time will tell but the signs and conditions are there for modular housing to thrive. Change is coming.