Market Trends of Indonesia Prefabricated Buildings Industry
This section covers the major market trends shaping the Indonesia Prefabricated Buildings Market according to our research experts:
Rising Property Prices to Increase the Adoption of Prefab Construction
In terms of sales, the latest survey indicated stronger residential property sales in the primary market of Indonesia, accelerating to 15.23% (Y-o-Y) in the second quarter of 2022 after contracting 10.11% (Y-o-Y) in the first quarter of 2022. This trend indicates a growing demand for housing. However, the latest Residential Property Price Survey conducted by Bank Indonesia indicated that residential property prices posted modest annual gains in the second quarter of 2022, with the Residential Property Price Index (RPPI) growing by 1.72% (Y-o-Y), relatively limited compared to 1.77% (Y-o-Y) in the previous period. These increases in prices are discouraging property buyers.
Prefab homes are less expensive to build. This type of construction can speed up construction by up to 50%, and with the right tradeoffs, it can cut costs by 20%. Many developers are using prefabricated construction to build residential projects to ultimately reduce the final pricing. This adoption of prefabricated construction may lead to increased sales of residential properties in the Indonesian market.
Precast Concrete Holds Largest Share in the Market
Precast concrete holds the largest share of the market, driven by the increase in off-site construction activity. The rapid infrastructure advancement initiated by the government of Indonesia has increased the demand for construction materials such as concrete, which is huge. Considering the benefits of precast concrete over cast-in-place concrete, increased adoption of precast concrete is to be seen in the construction sector. Increasing awareness among manufacturers, designers, constructors, and end clients of the benefits of utilizing precast concrete will further increase its adoption.
Precast concrete construction technology is one of the most promising solutions to deal with the rising demand for housing and infrastructure construction. As per data from the Indonesian Prefabricated and Prefab Company Association (AP3I), the production capacity of precast concrete is always increasing. In 2019, the national precast concrete production capacity was 41 million tons, which rose to 43 million tons in 2020. In 2021, the production declined to 32 million tons due to the second wave of COVID-19 and further lockdowns.
