Modular Construction and 3D printed houses are becoming popular in GCC markets, but the real opportunity lies in Egypt. This presentation is useful for building material suppliers and contractors thinking about positioning themselves to sell effectively.

1. By 2022, the Global
Construction
Market will be
worth $13 trillion
Fastest growth rate in MENA
at 6.4% per year

3. Productivity - the construction industry suffers from low
productivity and has been slow to utilise modern innovations
Certainty in Delivery - building projects are completed with
an average delay of 20 months and an 80% cost overrun
(McKinsey)
Skills Shortage - a labor crunch is affecting the sector
globally, with few exceptions
Data Transparency - lack of timely and accurate project and
investment performance data impacts decision making
INDUSTRY PROBLEMS THAT AFFECT
GROWTH

4. COST OF LOW PRODUCTIVITY
If construction productivity were to
catch up to the rest of the global
economy, the value added would
increase by an estimated $1.6 trillion,
adding about 2% to the global
economy

7. “The Construction
Productivity Challenge
is really about
Technology Adoption”

8. The Construction
industry consistently
underperforms when it
comes to digitization.
LACK OF DIGITAL
MATURITY

9. HOW ARE SUCCESSFUL FIRMS WINNING?
Examples of innovative firms and regions suggest that acting in seven
areas simultaneously could boost productivity by 50 - 60%:
● Reshaping regulation
● Rewiring the contractual framework to reshape industry dynamics
● Rethinking design and engineering processes
● Improving procurement and supply-chain management
● Improving onsite execution
● Using digital technology, new materials, and advanced automation
● Reskilling the workforce

10. PRE-FAB AS A PRODUCTIVITY DRIVER
“Parts of the industry could move toward a manufacturing-inspired mass-production
system, in which the bulk of a construction project is built from prefabricated
standardized components off-site in a factory.
Adoption of this approach has been limited thus far, although it’s increasing.
Examples of firms that are moving in this direction suggest that a productivity boost
of five to ten times is possible.”

11. Hundreds of digital tools and
software have sprung up to
solve inefficiencies experienced
during bidding and tendering,
project management, on site
data capture and inventory
management.
OTHER DIGITAL
SOLUTIONS

12. WHAT IS THE MARKET SAYING?

13. $1.1 BN ++ $1.1 BN $2.3 BN
INTERNATIONAL TECH ACQUISITIONS

14. LOCAL INVESTMENT IN CONSTRUCTION
TECH
NOTABLE ACHIEVEMENTS
● 3-year e-Tendering deal
with Damac Properties
● Insights on $2.62 trillion
worth of GCC projects
● Online product / supplier
catalog directory

15. GLOBAL INVESTMENT IN CONSTRUCTION TECH

16. COMPANY PRODUCT FUNDS RAISED (2018) VALUATION
MODULAR CONSTRUCTION
MODULAR CONSTRUCTION
MODULAR CONSTRUCTION
MODULAR CONSTRUCTION
$865 M $3 BN
UNDISCLOSED
$50 M
$6.7 M
$1 BN
$650 M
Amazon is a
Series A investor

17. CONSTRUCTION TRENDS
Where we’re going….

18. TIRED WIRED INSPIRED
FORMWORK PRE-FAB / MODULAR
CONSTRUCTION
3D PRINTED HOUSES

19. BENEFITS OF PRE-FAB FOR OWNERS
QUALITY - factory produced components means less errors and higher quality
TIME - standardised components and pre-fab manufacture means
construction tasks can be executed in parallel, rather than in series. Shorter
schedules mean revenue can be generated earlier from rent and borrowing
periods are also shortened
SAFETY - pre fab manufacturing means less time is spent onsite overall,
reducing risk. Additionally, indoor factory controlled environments are more
predictable and safer than outdoor on site ones
CERTAINTY IN DELIVERY - pre-fab construction is more predictable and
manageable. It’s also more transparent due to the collaborative nature of
project execution

20. LABOR SAVINGS PROCUREMENT SAVINGS TIME SAVINGS
● All the equipment and
workers are in the
same place (rather than
moving to, from, and
within a construction
site)
● A less expensive labor
pool can complete work
off-site that would
require costly
subcontractor labor on-
site
● Many design
components and
materials are
standardized across
projects, therefore
orders can be placed at
higher volumes
● Purchasing also
originates with the
manufacturer rather
than subcontractors,
reducing or eliminating
middle men / overheads
● Off-site construction
can reduce project
construction time by
between 40 and 50%,
because several
aspects of the
construction process
can be completed
simultaneously, rather
than sequentially as is
required in traditional
construction
BENEFITS OF PRE-FAB FOR CONTRACTORS

21. BARRIERS TO PRE-FAB CONSTRUCTION
Financing Barriers:
Compared to on-site construction where
loan amounts are given based upon the
value of contract signed, pre-fab
construction requires factories to carry
inventory prior to getting a contract
This new method of financing requires
collaboration and communicating with
banks and lending entities, as well as novel
inspection and verification procedures, eg
digital tracking of components.
Operational Barriers:
Pre-Fab factories have more fixed costs
and less flexibility than on site
construction. Staff and machinery have to
be kept running.
Insufficient capitalization means only able
to focus on existing commitments, can’t
grow pipeline or develop new business.

22. CONTRACTOR RESISTANCE TO CHANGE
Contractors and specialized subs may stand to lose from a move to a more efficient
system in which many of them win orders by optimizing up-front pricing and then
making up for lost surplus via change orders and claims, or where non-standard or
costly specifications can mean higher revenue rather than lower margins.
Currently, many contractors are more focused on maintaining those margins than
measuring and improving productivity.

23. RESEARCH ON BARRIERS TO MODULAR CONSTRUCTION

24. INFORMATIONAL BARRIERS

25. OPERATIONAL BARRIERS

26. WHERE DOES PREFAB
WORK BEST?

27. WHERE PRE-FAB MAKES SENSE
Pre-Fab and Modular construction will develop most where there's
cheap land, where the local authority is pragmatic and open to
innovation, and where there's a desire for quick delivery (EG MENA
housing authorities)
The rental sector, where investors are looking for products at scale and
quickly, is an obvious opportunity to enable investment in Modular.

28. CURRENT UPTAKE OF PRE-FAB
84% 25% 5%
of detached
homes are
modular built
of all new homes are
prefab
of construction uses
prefab methods
Greatest Gov
Support
Greatest
Private
Investment
300k units /
year

29. EGYPT OPPORTUNITY

30. 97 million people 2% population
growth rate
500k units
needed per year
20%
Of Egyptians live
in Cairo

31. 2005: “500,000 homes”
2014: “1,000,000 homes”
By 2014 only 360,000 units delivered.
Of those, thousands were unconnected
to utilities and thousands more people
who’d paid down payments hadn’t
taken the keys.
Initially to be built by Arabtec at a cost
of $40 billion, with land donated by the
army.
By the end of 2016, only 250,000 units
had been delivered.
GOV EFFORTS AT HOMEBUILDING

33. While the Social Housing Project
produced 50,000 units between
2012 and 2014….
…..informal housing in Egypt’s
ashwa‘iyyat increased by at least
2 Million flats in that same period.

34. EGYPT IMF REFORMS:
IMPACT ON CONSTRUCTION COSTS
The pound devaluation increased
the price of some building materials
like steel and cement products, by
as much as 100% in less than two
months.
A second increase in the
price of petroleum products
in July 2017 also led to a 10-
15% bump in construction
costs.
2400 construction firms went
bankrupt between the flotation
of the Egyptian pound in
November 2016 and July 2017.

35. EGYPT IMF REFORMS:
IMPACT ON CONSTRUCTION DISPUTES
$$$ + up to 40%
Increases in MEP costs, building materials and
labor, are impacting contractors bottom line and
leading to losses of 40% on LSTK contract cost
LUMP SUM
CONTRACT

36. WHO IS BUILDING EGYPT?

37. PUBLIC VS PRIVATE DEVELOPMENT
GOVERMENT
The Ministry of Housing traditionally caters to the lower end of the market, through the enormous power of the Armed
Forces as a construction partner. NUCA (under the MoH) releases land for development.
PRIVATE SECTOR
The middle to luxury segments are catered to by local and GCC contractors.
PROBLEMS:
The government has been moving into other market segments through its City Edge Development Company, and
through its Dar and Sakan Masr projects.
Where public efforts to build for the lower end housing market have failed, they have left it up to the
private sector, however land costs and low purchasing power from consumers (including many who
wouldn’t qualify for the subsidies offered by the SHP) have meant that it just hasn’t been economically
viable to do so.

38. PRE-FAB CONSTRUCTION
TO THE RESCUE?

39. COMPETITOR OVERVIEW

40. REGIONAL CONTRACTORS

41. AL KATHIRI HOLDING
Dec 2018: MoU signed to produce 3D panels
in Saudi factory (as franchisee)
Al Kathiri Stock rose 7.8% on announcement
Mar 2019: MoU signed to produce 3D panels between
Italian firm Emmedue and Al Kathiri subsidiary - Alian
Industries
The Saudi Ministry of Housing has granted approval to
use these panels in its projects

42. Saudi company orders
world’s largest 3d printer
from Denmark’s Cobod
international
Delivery expected:
May 2019
World’s Largest 3D Printer
Elite for Construction and
Development Company

43. Created new Company
The ‘BOD2’ machine
$$$
Largest formwork /
scaffolding specialists in the
world take a minority stake
in COBOD
Denmark’s 3D Printhuset specializes in 3D
printed construction .
Recently it created a new company
focused solely on the manufacture and sale
of the company’s modular BOD2
construction 3D printer, which is ten times
faster than its previous iteration
“Construction Building on Demand”
BACKGROUND ON COBOD

44. “Prefab Hospital”
2015: KEF partnered with
Australian TAHPI to create a
Modular Hospital
Launched the KEF-TAHPI
Design Studio at Dubai
Healthcare City
KEF Infra posts record results
Jan 2018: KEF Infra has an off-site
production factory in India reports 2017
revenues of $150m. Active in multiple
construction sectors such as healthcare and
retail
KEF Infra mentioned tying up with Bahrain
pre-cast companies to manufacture
whatever they cannot export from India
KEF Infra merges with Katerra
Jun 2018: KEF Infra announces strategic merger
with US Katerra. At this time, combined bookings
totalled $3.7bln across the US and India
Plans to aggressively address housing issues in
India and the middle east as well as penetrate
healthcare and education sectors

45. First 3D printing patent filed
for construction moulds
Moulds can be used by fit-out and construction
companies to cast concrete, cement, and
gypsum in complex shapes at a quicker pace
than they would with traditional methods.
Partnered with Consolidated Contractors
Company to allow them to create a digital
inventory of spare parts and components
(for 3D printing)
“Virtual Warehouse”

46. FACTORS DRIVING THE MARKET (GOV)
Needs to build 2 mn houses over next decade
Aims to have 60% home ownership by 2020
70% by 2030
25% of houses should be 3D printed by 2030

47. FACTORS DRIVING THE MARKET (PRIVATE)
● Property prices at their lowest since 2014
● Large multinationals are reducing headcount and moving 30% of roles to Egypt + Saudi (eg PepsiCo)
● 150,000 construction related jobs shed in UAE in the last few years (Aecom)
● Only half of the 60,000 household units under construction will be handed over this year
● Number of projects on hold: 980+ (almost 30% of all projects “under construction”)
● Too many contractors for the volume of work
This means contractors need to innovate or die.

48. GLOBAL CONTRACTORS

49. UK - GOV SUPPORT DRIVES THE MARKET
UK needs 300,000 new housing units per year by 2020.
2017: Gov produces Housing White-paper, cites offsite construction as the way forward. Resolves to make
access to financing easier
2017: Gov announces 1.7 billion GBP “Accelerated Construction Programme” allowing local authorities to bid
for gov investment, and allowing small builders to grow by giving access to development finance
2018: Gov publishes National Infrastructure and Construction Pipeline announcing 600 billion GBP worth of
projects over the next decade.
Ministers want more projects to be delivered using digital manufacturing techniques
Gov subsidizies Off-Site factories (eg 22m GBP grant to Laing O’Rourke)
Gov moves towards more of a PPP model (to share risk / reward)

50. GOV SUPPORT STIMULATES INDUSTRY CERTIFICATION
BOPAS offers assurance of
structural integrity
for modern methods of
construction

51. Completion of 15m
healthcare facility in UK
(steel modular)
150m GBP offsite facility in UK
Part of a “Best in Class” consortium
Signed a 2 bln GBP partnership
with Stanhope Developers over 4
years to build modular housing
Used Prescient for modular
construction of luxury multi family
apartments in USA
LARGE CONTRACTORS SUPPORTING MODULAR
Accredited

52. INDUSTRIAL MODULAR

53. “Factory in a box” concept for use
in emerging markets
“Factory In A Box” cuts the construction
programme from 12 weeks to 4 and
delivers an estimated 30% saving
compared to the same facility built
conventionally.
PARTNERS:

54. IDENTIFYING THE CUSTOMER

55. CUSTOMERS AND THEIR MOTIVATIONS
CUSTOMER OPERATIONAL MOTIVATIONS FINANCIAL MOTIVATIONS
Owner / Developer Building Performance Shorter time to Revenue
Architect / Designer Flexibility of material Reputation
General Contractor Time Profitability
Subcontractor Ease of using product Lower Labor Costs
Distributor/Dealer Higher Demand Higher Profit Margin

56. Operational
Motivation
PERFORMANCE PROFITABILITY PRODUCT
Financial
Motivation
Quicker Revenue Increased Value
Shorter Installation
Time
BUILDING OWNER GENERAL CONTRACTOR SUBCONTRACTOR
MOTIVATION MATRIX

57. CONTRACTORS - FURTHER CONSIDERATIONS
OBJECTION CUSTOMER BEHAVIOR MARKETING SOLUTION
Contractor may not have
control over the modular
supplier, may not have
done due diligence.
Hesitant to absorb risk,
increases length of sales
cycle
● Brand Awareness
Activities
● Content Marketing
If contractor has heard of
the technology / supplier,
might have little to no
experience with the
product.
Hesitancy to use, less likely
to make a commitment and
impacts referrals
● Events (workshops
and presentations)
● Videos / Training

58. CUSTOMER PROFILES TO TARGET
DESCRIPTION:
“Early Adopters”
Already using construction tech
particularly BIM:
DESCRIPTION:
GOV
Ministry of Housing
PRIVATE
General Contractors who have
worked on large scale residential
projects, (both local and regional)
TARGETS FOR QUICK SUCCESS TARGETS FOR SCALE

59. CUSTOMER PROFILES - EGYPT
GOVERNMENT PRIVATE CONTRACTORS
Ministry of Housing Orascom
New Urban Communities Authority (NUCA) Hassan Allam
National Service Products Organization (NSPO) Talaat Mustafa
Armed Forces National Land Projects Agency Arab Contractors
Wadi el Nile
Al Abd
EGYCO

60. EXAMPLE MESSAGING
PUBLIC
PUBLIC/
PRIVATE
PRIVATE
Developer Ministry of Housing Ministry of Housing
China Fortune Land
Development
General Contractor Armed Forces Arabtec
How We Help Deliver Volume Deliver Value Deliver Speed

61. RECOMMENDATIONS

62. MORE MARKETING LESS “SALES”
Sales engineers are one
of your most expensive
resources.
They should be closing,
not creating the
opportunity.
Think about the Demand Generation campaigns by companies like:
BEFORE... TODAY
Tools
Staff
Staff
Tools

63. A COMMS STRATEGY FOR GROWTH
Demonstrate the breadth of your knowledge and,
act as the de facto authority on modern methods of construction in Egypt.
Target not only your direct customers but everyone else in the supply chain,
including consultants and architects, financiers and insurers.
Enable contractors and developers to deliver the housing they promised,
whilst helping them to maintain profitability.
MARKET PARAMETERS:
● First Mover (dis)advantage
● Challenger Brand
● New Product / Greenfield Market
SUPPLIER PROMISE:
Certainty in Delivery

64. COMPETITIVE
MARKETING TACTICS
CREDIBILITY
TRANSPARENCY
CUSTOMER SERVICE
Align and collaborate with academia
Communicate better data
to highlight savings
Outperform competitors in service levels
using both on ground staff and digital
comms
SALES
OUTCOMES
STAGE OF
CUSTOMER
JOURNEY