Whisper-quiet building: The modular timber building site

Because on the building site itself, nothing much happens. The prefabricated spruce modules are just assembled on site. For this, a company like LiWooD External Link needs just ten weeks from the first module to moving in. The preparing the modules takes place in a mobile field factory just a few kilometres away. From one source and with one central building material: prefabricated components made of laminated plywood. This saves about 50 percent of the distance normally covered by separate suppliers in such a project. 

In addition, the building material is renewable and the ecological balance sheet on the owner's or investor's side looks much better. A good marketing tool and, for many, increasingly part of setting the right tone in times of climate change. But what is the long-term potential of modular timber construction for owners and investors? Especially with regard to topics such as ESG and sustainability - but also in general? 

We ask Markus Elmer, Co-Head of Residential Advisory at Cushman & Wakefield, and Martin Wellnitz, Head of Project Management at Cushman & Wakefield. 

Markus, what are the advantages of investing in residential real estate like this?
ME: Definitely the speed. Traditional construction projects take many times as long. This fast turnkey production offers real advantages. Project developers can reinvest capital in new developments much more quickly due to the shorter completion cycles and thus make better use of it. The end investor, on the other hand, can generate cash flow more quickly. For example, in the case of long forward deal times involved in conventional construction, by then reinvesting in modular construction. A clear win-win situation.

Have environmentally sustainable aspects become even more important for investors today than they were a few years ago?
ME: Absolutely. A lot has happened here, especially in the past few months. Many investors are looking specifically for advice on sustainability and ESG and are positioning themselves much more strongly on these factors. If ESG criteria such as energy standards are not sufficiently fulfilled, this can be a deal-breaker  when buying. This is true not only in the residential sector, but also in the office sector. The reason here is that building users are increasingly demanding sustainability as an all-encompassing approach. The political and social pressure on companies to assume social responsibility in addition to pure building emissions reduction is growing. Here looking at real estate in a more holistic way plays a major role - especially with regard to the sustainability of building materials. 

Martin, looking at the building site: What is different about modular construction and, on top of that, with wood?
MW: In addition to the high speed, the low and calculable risk in terms of costs, deadlines and quality is a real plus point with this construction method. Due to the standardised prefabrication, the quality is consistently high. This is also noticeable in construction monitoring - which becomes much more efficient due to the stringent processes of modular construction. The individual construction phases are characterised by a high degree of transparency. What is also astonishing about the building site: despite prefabrication, the flexibility of modular construction - especially with wood - is extremely high. This results in floor plans that are creative and individual. When a tenant moves into their apartment, it is no longer possible to tell where one module ends and is connected with the next. A full-quality living experience.   

Sustainability certificates, regulations, support funding: ESG criteria are much discussed. Is this a short-term trend or a development that is here to stay?
MW: ESG will remain ever-present as a topic. In terms of sustainability and ESG, we are currently even just at the beginning. It is true that excellent certificates such as DGNB and the classic energy certificate have existed for years. However, with the introduction of the taxonomy at EU level and the EU Disclosure Regulation, the topic is currently gaining new momentum. The regulations demand greater transparency from financiers and also promote green projects. The housing sector is particularly in the spotlight, for example with funding programmes from the Kreditanstalt für Wiederaufbau. For a KfW 40 standard, the repayment subsidy per dwelling is 20 percent to a maximum of 24,000 euros, or often even 30,000 euros. These are conditions that are quite attractive and also apply to modular timber houses. And go some way to fulfilling society’s growing desire for a more sustainable and climate-friendly way of living together.