Focus turns to modular housing to solve multigenerational home cost issues
LOS ANGELES: The focus has turned on modular hosing as the solution to the cost of multigenerational homes.
A Melbourne-based modular builder is preparing to switch its production line, previously focused on government projects, to take on prefab homes, as the housing crisis raises demand for affordable residential options.
Grove could potentially crank out as many as 1000 home annually as it gets up to speed, according to its chief executive, Brenton Grove.
Its advantage is a focus on the mass market, especially land lease communities, with a no-frills design and minimal variations on that.
“Essentially, what we’re trying to do is to be the Henry Ford [of residential construction] – ‘you can have any colour, so long as it’s black’ – because the only way we can pass value on is to get people into homes,” he said.
“If we can get the building [delivered] 20 grand cheaper, we pass 20 grand back to the customer. We just want to keep doing more and more and more.”
The modular builder has been in the prefab business for about 20 years, mostly delivering for the state or federal government within the school, hospital and kindergarten sectors.
“That’s something we’ll continue to do,” Grove said. “But the thing that we’re looking at now, or transitioning to, and having some success with, is modular housing.”
Grove’s edge, though, is not to focus on one-off product in housing but to use “the grunt and prowess of our manufacturing facility” to deliver at scale.
“We’re not wanting to build 20 or 30 or 50. We want to do minimum 1000 in each state,” he said.
“It’s a quick process to mobilise for us, because we have the IP, we have the people. We just need a box. The biggest challenge for us at the moment is market confidence.”
Grove is in talks with at least two major developers that are involved in land lease projects. Under that model, residents – typically retirees on a tight budget – buy a prefab home outright that sits on a plot in a housing estate, for which they pay a ground rent.
Recent CBRE estimates put the number of land lease sites operating around the country at around 40,000, with another 15,000 to 20,000 under development. That number could rise as Australia’s population ages and more retirees look to cash out of their family home, and downsize into a more affordable land lease community.
Construction costs can vary between $350,000 to $600,000 per site. Residents will be paying $700,000 to $1.2 million for new designs, compared to $400,000 to $800,000 for the older models, on the CBRE analysis.
The Grove model comes in well below those estimates.
Its two-bedroom, 127-square-metre homes takes just 15 days to build from start to finish and the Pakenham factory, in Melbourne’s south-east, can deliver four a day. Five days required on site are needed to finalise the installation of the homes.
A two-bedroom Grove modular home will have a price tag of $298,000, in two colour schemes and five layout configurations.
“We’re not trying to maximise margin per unit. We’re trying to continually pass value back to the consumer so we can grow volume,” Grove said.
“It’s the Costco model, where any value we’re able to extract from efficiency, the supply chain and up and downstream partners, we will always pass back to the consumer, so long as we can continually add more value.”