Investment opportunity: Serial and modular residential properties – scalability and cost advantages are no longer theory

Serial and modular buildings are no longer perceived only as soulless functional buildings. New technologies and designs make it possible for industrial prefabrication not only to create real estate quickly, reliably and more cost-effectively, but also to make it visually attractive. Serial and modular construction is increasingly seen as a key to effectively countering the shortage of affordable housing – especially in metropolitan areas and large cities. In the recent past, investors, portfolio holders and asset managers have also discovered industrially prefabricated real estate as an investment opportunity.

In serial construction, individual building sections are industrially prefabricated and only assembled on the construction site. In modular construction, a sub-area of serial construction, entire room modules are prefabricated. In addition to efficiency and cost advantages, the focus of current considerations is also on yield potential and growing acceptance among tenants and municipalities. In addition, buildings erected in series can also be produced with all common energy concepts and therefore also make a positive contribution to CO2 reduction.

How investors position themselves vis-à-vis serial or modular construction was shown by a survey of institutional investors conducted by INDUSTRIA in spring 2025. Almost half of those surveyed can imagine investing in funds with corresponding properties. Only around ten percent categorically reject this. Expected returns are decisive for acceptance: 56 percent of institutional investors expect higher returns than with conventional construction methods – a realistic picture in view of shorter construction times and lower construction and financing costs. However, the reason for this could also be the assessment that serial concepts are still fraught with additional risks. In the long term, however, this risk premium will be reduced.

A key advantage of serial production is planning and cost security. In practice, developers report construction cost savings of between 10 and 30 percent compared to conventional construction methods. These savings can be attributed to economies of scale, among other things. Automated production in large quantities increases efficiency in production. At the same time, established quality standards and weather-independent production of components in the factory reduce the susceptibility to defects.

The construction time can be significantly shortened by prefabrication, also because in many cases this can be carried out in parallel with the civil engineering work. The delivery takes place "just in time" on the construction site for final assembly. Industrially prefabricated buildings tie up significantly fewer workers than conventional construction sites – in times of staff shortages, especially in the construction industry, this argument is becoming increasingly important.

For investors and project developers, the shorter project durations mean less risk and faster revenue streams made possible by earlier leasing or use. The short construction time has another significant financial advantage: it significantly reduces financing costs in the project development phase. This effect also makes a positive contribution to the overall profitability of a residential investment.

Experience in residential and commercial buildings shows that tenants accept and appreciate serially constructed buildings when standardization and quality of life go hand in hand. Municipalities as land providers and approval bodies are also reacting positively. The prefabrication of the units and the standardised construction method accelerate approval and development processes – an aspect that is becoming increasingly important, especially in times of scarce administrative capacities in building authorities.

Serial and modular construction is becoming a strategic investment theme, while conventional residential construction is currently finding it more difficult to meet the return expectations of institutional investors. Politicians are also increasingly open to the industrial prefabrication of residential buildings because they see it as an opportunity to create living space quickly and cheaply. Investors, developers or asset managers who take advantage of the opportunities today can benefit from shorter construction times, lower costs and attractive returns.

Learn more about INDUSTRIA: https://www.industria-immobilien.de/