Market status and market characteristics analysis of China's prefabricated construction industry in 2021

Source：TBT Release Date：2023-12-29

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As one of the basic industries of our national economy, the construction industry has been showing a booming trend in recent years. In the new round of economic cycle, with the growth of China's national economy, the construction industry has always maintained a relatively high growth trend. In addition to the total output value of China's construction industry in 2015 only increased by 2.29% compared with the previous year, the remaining years have maintained rapid growth, the average growth rate of China's total output value of construction industry in the past five years exceeds the growth rate of China's GDP in recent years. Data show that the total output value of China's construction industry increased from 180,757.47 billion yuan in 2015 to 24,844.577 billion yuan in 2019, with an average annual compound growth rate of 8.28%.

While the construction industry as a whole is booming, the prefabricated construction industry is also developing rapidly. From 2014 to 2018, China's new assembly construction area has maintained an annual growth rate of more than 24%, and by 2018, China's new assembly construction area has reached 190 million square meters. In recent years, the state has put forward higher requirements for the future development of the construction industry, and it can be predicted that the future prefabricated construction industry has great development potential. In April 2017, the People's Government of Guangdong Province proposed that by the end of 2020, prefabricated buildings in the Pearl River Delta urban agglomeration should account for more than 15% of the new construction area, and by the end of 2025, prefabricated buildings should account for more than 35% of the new construction area. Other provinces and cities have also issued specific implementation opinions, plans and action plans for prefabricated buildings to provide policy guarantee for the development of prefabricated buildings.

Prefabricated construction industry features:

1. Prefabricated buildings have low permeability and large space for improvement

In the industry, the proportion of prefabricated building area in the area of new real estate houses is called prefabricated building penetration, which is used to represent the coverage rate of prefabricated buildings in a country. In 2018, China's new prefabricated construction area was 190 million square meters, and the area of new housing in China's real estate was 2.093 billion square meters during the same period, and the prefabricated construction area accounted for only 9%. In the major developed countries, the construction modernization has been relatively mature, and the construction industry is relatively mature and perfect, especially the developed countries with a high degree of industrialization have developed various special systems for prefabricated buildings, and the penetration rate of prefabricated buildings in developed countries such as the United States, Japan, the United Kingdom, Singapore and Sweden has reached or even exceeded 70%, while the penetration rate of prefabricated buildings in China is only 9%. There is a big gap with developed countries, but at the same time, it means that there is huge room for improvement.

2. Precast concrete structure accounts for a relatively large proportion, while precast steel structure accounts for a relatively small proportion but develops rapidly

At present, the market dominant position of precast concrete structure is temporarily unshaken, although the proportion of precast steel structure is less, but with high strength, light weight, environmental protection and other factors, the growth rate is faster. In the civil buildings of the world's major developed countries, steel structure buildings account for more than 20%, of which the United States accounts for 45%. In contrast, steel structure buildings in China's civil buildings account for only about 5%, and there is huge room for improvement in the future.

Evergrande Real Estate Group Co., Ltd. is a subsidiary of China Evergrande Group, located in Shenzhen, China. Evergrande Group is a world's top 500 enterprise group integrating real estate, finance, health, tourism and sports, with total assets of one trillion yuan.

3. The cost is mainly the construction and installation cost

85% of the cost of prefabricated buildings in China is the construction and installation cost, and the construction and installation cost includes labor costs, materials costs and other expenses. With the increase of the assembly rate of prefabricated buildings, the proportion of labor costs gradually decreased, and the main cost of materials gradually increased, among which the labor costs of steel structure prefabricated buildings accounted for a relatively low, only 8.2%, and the material costs accounted for a relatively high 72.0%. Taking into account the gradual increase in labor costs in the construction industry, as the scale of application expands, the cost of materials will gradually decline.