Cracking The Pre-engineered Buildings Market Secret

Increasing infrastructure investments owing to the rise in industrialization and urbanization in developing economies such as India, Vietnam, and China are expected to drive the pre-engineered buildings market. India plans to spend US$ 1.4 trillion on infrastructure during 2019-23 to have a sustainable development of the country.

Investments are happening in sectors like retail, urban development, industrial, aviation, and hospitality. Interarch has invested 150 Crores in Gujarat and about 100 crores in Tamil Nadu to set up another manufacturing plant that will cater to the needs of the Southern region.

Besides, rising investments in commercial spaces are expected to positively contribute to the pre-engineered building market revenue. For instance, in India, commercial property leasing has witnessed a growth of 30% in the first quarter of 2019, and the leased area is estimated to be around 60 million sq. ft according to secondary sources.

Additionally, the pre-engineered buildings market is driven by the increasing demand for warehouses in emerging economies such as India, South Africa, Brazil, and Saudi Arabia. With a rise in the number of e-retailers, the demand for warehouses is also increasing. To meet the supply-demand, these e-retailers are constructing warehouses to enhance their distribution. Hence, PEBs involve the fastest method to build warehouses.

Metal building solutions are inherently green products and have a far smaller impact on the environment as compared to traditional brick and mortar construction. 

The energy-efficient methods in producing steel used for these structures, and the high recycled content, help in substantially reducing greenhouse gas emissions. Even after demolition, these buildings don't accumulate wastage like asphalt shingles, concrete, brick, and dust. The only by-product is metal scrap which is 100% recyclable.

Many PEB manufacturers have developed high-efficiency windows and insulation for roofs, walls, ceilings & floors. The use of skylights and solar panels on rooftops will meet daylight and captive power requirements, while, at the same time, reducing emissions and gaining carbon credits under Clean Development Mechanism (CDM).

Moreover, favorable government schemes for constructing green buildings will offer new growth avenues for the industry over the ensuing years. For instance, the Government of Singapore has mandated the use of PPVC elements in numerous projects on government lands. 

Various government regulations and policies supporting the growth of the construction industry are expected to provide opportunities to market players. For instance, the Government of India’s initiatives towards developing smart cities and infrastructure projects, providing housing for all by 2022, and increased transparency in the real estate sector, will lead to opportunities for innovative and modern building products. 

Besides the growth of the pre-engineered buildings industry, the application of pre-engineered constructions to heavy engineering and larger infrastructure projects is creating new lines of development. Projects like smart cities, new no-frill airports, international terminals, industry corridors, power plants, ports, and others require heavy steel structures and a different approach in comparison to pre-engineered buildings. Hence, this is likely to provide opportunities for PEB in near future.

The global pre-engineered buildings market has witnessed a negative impact on the product demand in recent months owing to the lockdowns imposed in most countries due to the outbreak of COVID-19. Global economies have contracted by 5% to as much as 20% during the first half of 2020. Increasing COVID-19 cases and uncertainties in the development of vaccines are poisoning the GDP to decline till the end of 2020. The global trade volumes are projected to decline between 13% and 32% in 2020 as a result of the economic impact of COVID-19.

Nationwide lockdowns have halted construction and impacted this hit labor-intensive sector as migrant workers leaving the labor colonies at construction sites is critically hampering construction activities across the world. 

As per the study by International Labor Organization, during the COVID-19 pandemic, nearly 52% of labor absenteeism is observed in the Indian construction market. The emergence of the COVID-19 pandemic has increased market uncertainty and volatility. It has led to the complete economic shutdown in India, China, the US, Italy, Israel, the UK, and other countries that have significantly affected businesses across industries. Moreover, the volatility in the stock market around the world has hurt stock prices and trading volumes for manufacturers. This has resulted in a significant decline in new residential and non-residential constructions that has shrunk the demand for this type of construction. Also, commercial and residential construction projects are usually backed by financial institutions and investors. According to the European Investment Bank, approximately USD 13,300 million was invested in Europe for infrastructure development, environmental projects, SMEs, and midcaps financing. Owing to the sudden outbreak of the pandemic, the cash inflow-outflow ecosystem has been majorly hampered, resulting in low returns on investments.

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