Home Real Estate Could Your Next Property Investment Be A Prefab?

Could Your Next Property Investment Be A Prefab?

by Paul

In the UK, prefabricated housing is still, decades later, associated with post-Second World War Britain. They were a necessary solution to a housing crisis that today’s shortages of affordable homes pale in comparison to. And the image of prefabricated buildings as temporary, cheap and sub-standard, a perception consolidated by the fact asbestos was commonly used in wall panels and roofs, has remained in this country. It is fair to say that owning a prefab is not the aspiration of first time home buyers in the UK or the first property investment that springs to mind for would be buy-to-let landlords.

But that could be about to change. In many parts of the world, homes that are at least partly built from prefabricated elements are standard. And not only in countries that would be considered to be developing economies. In Japan, for example, modular homes are standard and in Sweden 84% of detached houses include prefabricated timber components. The modern prefab trend is also quickly gaining traction across mainland Europe, most notably in Germany and the Netherlands.

And the UK could be next. Sekisui House, one of Japan’s leading housebuilders and last year responsible for 5% of the country’s new housing stock with 43,735 modular homes completed, has taken a 35% stake in a new partnership established between them, the government and Manchester-based developer Urban Splash. While Sekisui’s new chief executive for its UK business Kenta Konishi describes the joint venture as an initially ‘small investment’, he also states that the ambition is to ‘grow it big’.

Britain’s established big housebuilders would do well to take note of Sekisui’s entry into the UK market. Last year the company build more prefab homes in Japan than the combined efforts of Persimmon, Taylor Wimpey and Barratt Developments on the domestic market. And a modern, aesthetically pleasing, but still cost effective, new generation of prefabricated housing could be exactly what is required to address the UK’s target of 300,000 new homes a year by the middle of the next decade. The current rate of construction is just over 200,000 – leaving a huge gap to be somehow filled.

Presumably with that ambitious, many have said unrealistic, target in mind, Homes England, the government’s housing delivery agency, has committed £30 million of equity and debt to the Sekisui/Urban Splash venture. The Japanese are contributing staff to help improve productivity and the quality of the prefabricated housing elements manufactured at Urban Splash’s Derbyshire factory.

Mr Konishi views the UK’s critical housing shortage as an enticing and unexpected opportunity for Sekisui:

“We were not really aware that there’s a huge lack of housing supply in this country. The UK is one of the leading countries for design and architecture, so when took a look we were a bit surprised because we see many things are advanced in this country but housing was quite left over, in a sense.”

The prefabricated homes built by Sekisui are on a different level to what most Brits would naturally associate with the construction style and target the mid-market segment as well as affordable housing. Sekisui’s Tokyo ‘dream factory’ hosts 20 model homes representing a variety of architectural styles that represent a range that includes traditional Japanese aesthetics, North American and Scandinavian styles. Customers help in-house architects customise their personal home design through a detail questionnaire on their requirements and preferences. The home and landscaping around it is usually then completed within 3 to 4 months. Average prices come in at about £270,000 before the cost of land, which, in Japan, is usually purchased separately.

As well as building aesthetically appealing prefabricated homes built with quality materials, Sekisui homes incorporate cutting edge technology such as an advanced air ventilation system developed in-house. The company claims to be the world’s largest builder of net-zero energy homes.

Property consultancy JLL assisted Sekisui in its entry to the UK market and spokesman Ian Guthrie has commented:

“Their entry into the UK is a game changer for both modular housing and the wider housebuilding industry.”

Risk Warning:

This article is for information purposes only.

Please remember that financial investments may rise or fall and past performance does not guarantee future performance in respect of income or capital growth; you may not get back the amount you invested.

There is no obligation to purchase anything but, if you decide to do so, you are strongly advised to consult a professional adviser before making any investment decisions.

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