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Press release Dec 18 2013

UMACO partners with Aus-Asia Global Resources HK The Directors of the combined entities of UMACO Australia (comprising UMACO Australia and UMACO Papua New Guinea) announce with much excitement a new partnership with Aus-Asia Global Resources Hong Kong Limited.

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UMACO HOUSING

Market Research

Australia
Australia has consistently had a relatively high rate of home ownership – since the early 1960‟s around 70% of occupied private dwellings have been either owned outright or being purchased.
There has been average of over 100,000 new houses approved for development each year over the past 3 years. The total value of new houses in Australia was $20,863.1 million in 2004-5 an 1increase of 11.1% 1
Quantitative research on retail pricing of new homes in Australia (Building Approvals) in recent years is as follows:

House Pricing Index
Year/Period Price Index
2002-2003 $159K 100
2003-2004 $175K 110
2004-2005 $191K 120
2006-YTD $214K 134
2008-YTD $236K
(Jan-Mar 2008)
These prices and index exclude the cost of the “land” component.
In comparison a UMACO New Generation Home can be supplied for around 60% to 75% of the price.

Competitive Analysis
Australian Market
Prefabricated Houses
The kit and fabricated home market is highly fragmented and direct product comparisons are subjective. A number of company’s specialize in “boutique” products such as log cabin construction, modular designs, pole construction and period/design orientation.
Inclusions and internal construction are minimal and basic and rely strongly on local sourcing and fit out by owners.
Prices of homes during the period vary from AUS$40K to AUS$600K with the main stream volume priced at AUS$110K to AUS $180K with size being the determining variant.

Pre Fabricated and Kit Homes are primarily targeted at Owner Builders, DYI trades people and budget focused home owners.
Manufacturers are not volume oriented and market on a one to one basis with prospective clients.
Global Market
It was estimated by the Freedonia Group in the US that the world demand for pre fabricated housing would reach 1.3 million units in 2004. Gains will be bolstered by housing activity in developing Asia/Pacific and Latin America, where prefabricated housing will find use as both low-cost units to reduce shortages and as high-quality, well-insulated houses for well-to-do consumers.
Source www.marketresearch.com


There is a global recognition of the economical, social and environmental benefits of the off-site pre-fabricated housing construction process. In 2004 the OECD and IEA held the Joint Workshop on Sustainable Buildings 2004 in Japan.
A summary of the key findings were:
1)  The full social and economic benefits of mass production of dimensionally-coordinated fit-up or infill systems for residential markets could be immense, but emergence of such an industry and supporting structures would require the intervention of governments.
2)  Since the building industry is fragmented and not innovative, the government is expected to take the initiative in relevant technology development such as developing building systems that are flexible and that can be readily deconstructed.
3)  A key to making buildings meet economic and social demands for a long period of time is to:

  • Reduce material use in the building sector and the generation of construction and demolition waste;
  • Reduce energy use in construction processes

The UMACO home process satisfies all these criteria. In addition UMACO has developed the technology and is building the infrastructure to support the operations of the business. In doing so the company has achieved much of the work identified in the Joint Workshop as the responsibility of government. This positions UMACO in great to position to access government support through grants and other forms of assistance.
The direction of the project for manufacturing houses off site relies significantly on economies of scale and allows greater control over costs and inclusion opportunities as well as large scale volume output therefore UMACO will focus on building strong export markets for its product.
Initial research of potential export markets has been limited to OECD nations due to the greater access to meaningful data, and the relatively higher standard of living to non-member countries.
The following analysis briefly outlines the underlying determinants of future demand for UMACO homes and the current demand of a selection of target countries.

 


Global Trends and Opportunities
In the Manufactured Housing Industry
    1.   United States of America
    2.   United Kingdom
    3.   China
    4.   Mexico
    5.   Turkey
    6.   Japan
    7.   Canada
    8.   India
    9.   Philippines
  10.   Thailand
  11.   El Salvador
  12.   Panama
  13.   New Zealand
  14.   Iran

1. United States of America
The USA is a very attractive market in terms of size and standard of living. The continually increases in home prices across the country has generated demand for quality affordable housing. The average price of manufactured houses in the US ranges from 10 to 35 percent less per square foot than conventional site-built homes. In December 2005 the average price of a manufactured home in the United States was US $67,500 or based on current exchange rates (US $ =. 99 cents AUS) approx AUS $68,500
Recent trends in the US market have seen greater customization of individual houses with state of the art bathrooms and kitchens and working fireplaces. There is an increase in the variety of architectural styles being offered in both single and double storey houses.
Manufactured Home owners are becoming more technologically savvy with 91% having a personal computer in the home, and 79% having a fax machine.
The figures below show a decline over the last seven years to 2005, however an increase in the last year. The increase could be attributed to the improvement in the quality of the manufactured homes, and the affordability factor, and growth in the overall housing market.
Research results vary on the US market for off site manufactured houses, resulting in estimates of 8% to 33% of the total new start housing market the difference is deemed to result from differences in definitions of product categories.
Report 1
The table below demonstrates the Manufactured Home Market in the US has a floor level of 8% of the total housing market. Based on no increase in the floor level the manufactured house market will have a minimum demand of approximately 150,000.
Industry sources suggest that the lucrative US market is returning to a period of growth after decline, and recent market aggregation and acquisitions there, and an ever-increasing focus of the leading companies on design and customization when marketing manufactured homes is aimed to widen the appeal to buyers.
Manufactured Home Shipments vs. New Single-Family Site-Built Housing Starts
(In thousands)  

Year

1999

2000

2001

2002

2003

2004

2005

New Single Family

Site-Built Housing Starts

1,302

1,231

1,273

1,359

1,49

1,611

1,716

Percent of Total

79%

83%

87%

89%

92%

92%

92%

Manu’s Home Shipments

Shipped

348

250

193

169

131

131

147

Percent of Total

21%

17%

13%

11%

8%

8%

8%

Total

1,650

1,481

1,466

1,528

1,630

1,742

1,863

The below table demonstrates approximately 66% of manufactured homes are located in communities as opposed to private property owners.

Report 2
The manufactured housing sector continued to exhibit strength in 1998, with issuance totaling $11.4 billion, a 28.1% increase over the $8.9 billion sold in 1997. Gains were reported in the sector despite the shake-up between the two largest issuers in the industry, with Green Tree being acquired by Conseco and BankAmerica’s sale of its manufactured housing lending business. Manufactured homes, which are prefabricated single-family homes, have become more popular in recent years as a result of several factors, including quality improvements in the construction of the homes, greater availability of desirable site locations, flexible financing terms and affordability for a wide segment of the population. The growing demand for these manufactured units is illustrated by the fact that prefabricated homes currently account for nearly one-third of all new single-family homes sold. Manufactured housing ABS issuance is expected to remain healthy, totaling a projected $14.0 billion in 1999, a 23.2% increase over 1998‟s level.
Source www.bondmarkets.com/story.asp?id=964

2. United Kingdom
The UK is experiencing a “chronic” house shortage that has accelerated price increases in the market. In response the Government commissioned the “Barker Report‟ which was published in March 2004. The main findings of the report were:
1.  An extra 70,000 – 120,000 extra homes per year is required to slow the inflation rate.
2. The Industry needs to address its weak record of innovation and remove barriers to the take-up of modern methods of construction and off-site manufacturing
3. “The House Builders Federation, and other interested parties, should develop a strategy to address barriers to modern methods of construction. This strategy should be developed to fit alongside existing initiatives, working closely with Government. The Industry has been relatively slow to adopt alternative manufacturing techniques – such as off-site manufacture, and steel and timber frame construction.”
Currently off-site manufacturing has the capacity to produce 30,000 homes per year, far short of what is required. The Government is looking at strategies to promote pre-fabricated and off-site manufactured homes, such as subsidies to house builders adopting off-site manufactured homes. It has committed to providing 4,000 off-site homes for the social housing sector with an investment of 250,000 million pounds, with further investment likely.
In 2003 new housing was one of the leading sectors within the UK construction industry, contributing just over 31% in terms of output value. Output in the overall sector now stands at over 15 billion pounds, compared with 12 billion pounds in 2002. Of new housing work, private sector output showed increases during 2003 of 27%, with public sector housing also rising at 17%.
Rapid increases in house prices over the last few years have culminated in prices rising to around 185,000 pounds in 2003.
The Government has predicted a requirement to build an estimated 200,000 homes in London and the south east by 2016. The chronic housing shortage led the Government commissioned “Barker Report”. The Report published in March 2004 aimed to examine the issues affecting housing supply in the UK and concluded in order to deliver long term stability and slow house-price inflation, a substantial supply in housing of between 70,000 – 120,000 extra homes per year would be required. A major point in the Reports Summary states:
“The Industry needs to address its weak record of innovation and remove barriers to the take-up of modern methods of construction and off-site manufacturing‟ (3)
Recommendation 33 of The Report:
“The House Builders Federation, and other interested parties, should develop a strategy to address barriers to modern methods of construction. This strategy should be developed to fit alongside existing initiatives, working closely with
Government………. The Industry has been relatively slow to adopt alternative manufacturing techniques – such as off-site manufacture, and steel and timber frame construction. …  (3)
Off-site manufacture of house building components currently has the capacity to produce about 30,000 homes per year, far short of the figure needed to meet official house projections. As such, the Government is promoting pre-fabrication and off-site manufacturing techniques, looking to methods such as steel and timber frame and modular construction to help solve the housing shortfall. Off-site construction currently account for just 3% of house building and the House Builders Federation is calling for Government subsidies to encourage house builders to adopt off-site manufacturing methods and to justify the extra costs involved in pre-fabrication. Subsequently the UK Government committed to providing 4,000 off-site homes for the social housing sector with an investment of 250,000 million pounds, with further investment likely. (4)


3. China
The Chinese Government, through various initiatives, has legitimized the concept of private home ownership. Most people now view home ownership as a goal and a long-term necessity. This, in turn, will undoubtedly result in exponential growth of home sales in future years. By 2000 the number of homes purchased by individuals was fifteen times greater than the number of homes purchased in 1991.
It is estimated that a growth rate of anywhere in the range of 15-30% will be sustained in building materials for several years to come, growing from US $24 billion to $71 billion between 2001 and 2005.
A further development is as of 2000, clay bricks, a traditional building material in China, have been banned in the construction of all new buildings in medium to large cities.

China’s Urban Makeup
Simple Rural Homes 6%
Luxury Villas 1%
Luxury Apartments  3%
Single Story Homes   7%
High Rise Apartments          28%
Six Storey or Less      48%
Communal Living     3%
Other Rural   4%
100%
Source http://www.softwood.org/REPORTS/emergingmkt_interimdraft_final.htm
In a recent study for the American Forest and Paper Association by the Center for International Trade in Forest Products (University of Washington) in 2002 concluded “The sheer size of the market and pace of economic development makes China one of the most attractive market opportunities. Pent-up demand for quality housing stock after almost 40 years of minimal investment in housing infrastructure insures that real estate growth will continue for a time. Strong and long-running GDP growth combined with a growing, urban middle class.”


“Today, the government would like to see housing and real estate be established as a force fueling growth in the economy, instead of a public good and burden to the state. This transformation of the housing industry is evidenced in a number of cities across China. Beijing alone is calling for the development of the housing industry in order to increase its current 6% share of GDP in 2001 to 10% in 2010
The government hopes to increase urban per capita living space to 25 m2, or approximately 72 m2 per household, by 2005. In order to achieve its plan, the government expects to construct 1.5 billion square meters of residential building space during the five-year plan 2001 - 2005. Domestic housing starts, which reportedly reached 22 million last year, are projected to grow to 24 million in 2002 and 26 million in 2003. This could result in approximately four to ten million urban annual housing starts, depending on the rate at which increases in per capita and household living space are achieved.”
Source http://www.softwood.org/REPORTS/emergingmkt_interimdraft_final.htm
Based on discussions with Chinese Authorities and AACIG in Caofeidian in mid 2007 it is advised and estimated that there is the potential to market 3 million UMACO houses in China (PRC) per annum.

4. Mexico
Low-cost and prefabricated housing initiatives and projects are a priority for the majority of the 32 Mexican states, as well as for the Federal government. However the Federal and/or local housing government agencies cannot afford to solve the housing deficit by themselves; they need and request the support of private industry.
Official sources estimate that at the end of year 2002, Mexico had a deficit of over 8 million homes. It is estimated that Mexico will require 30 million houses by 2010 and according to the General Census of Population and Housing, there were 22 million in 2000.
This demand coupled with the Federal and State Governments desire to accelerate pre-fabricated housing, makes Mexico an attractive market for manufacturers of pre-fabricated houses. The best option for foreign companies to enter in to the market is to establish a joint venture agreement with an existing Mexican firm well established in the housing industry.

5. Turkey
Experts estimate that Turkey would require an additional 1.5 million housing units in the next five years, due to population growth and continued urbanization. With the addition of the effect of the existing housing deficit and the rebuilding of single and multi family residential units in the earthquake stricken region of western Turkey, this requires that more than 500,000 new housing units must be constructed each year. (7)
Additionally, with a growing economy and rapid urban expansion, there is a need for the construction of more commercial/office/professional buildings. Likewise shopping malls and retail establishments need to be built as consumer spending is increased. Tourism development continues to generate new construction projects.


Turkish contractors are active in 49 countries across 4 continents, including Central and Eastern Europe, Russia, the Caucasus, Central Asia and the Middle East. Total work already performed or being performed throughout the world by Turkish contractors is estimated at US$ 45 billion. Today, the share of Turkish contracting in international global contracting services is about 2-3%. Therefore, a large number of the countries in the region rely on Turkey as a major supplier of building materials and construction services. Turkish firms have also started attracting attention of the US firms in Iraq Reconstruction projects and have also played an integral role along side the United States in major projects in Afghanistan.
As in other countries the construction industry is highly susceptible to macro economic factors. Government projects, mostly infrastructure projects such as highways, bridges, airports, seaports, etc., have been slowed by the economic crises. Residential and industrial buildings are mostly completed by the private sector. While this portion of the sector is also influenced by global financial conditions, there is still growth, albeit at a slower rate.
More than 5,000 local producers manufacture most building materials domestically. Turkey is primarily self-sufficient in conventional building materials. However, imported building materials are also increasingly being used, especially in modern world-class hotels, tourist centers, and in the country's more affluent residential areas. Products used in tourism projects are primarily imported as the Turkish government allows such materials to be imported duty free as an incentive for the tourism sector.
The building materials market should reach nearly $3 billion in 2003, of which nearly one-third is met by imports. Of the total imports, only 15 percent are imported from U.S. firms. Total local production should approach nearly $4 billion, with fifty percent of local production going to exports.
Best sales prospects in the buildings material industry are: flooring, prefabricated wall panels, wall paper, doors, windows, paint, insulation, sanitary wares and plumbing fixtures, prefabricated homes, roofing and siding materials, and earthquake resistant structures/materials.

6. Japan
Overview of Trends in Imported Housing Market
Imported housing accounts for less than 1% of new housing starts in Japan. However, import housing has shown strong growth, considering that this level 10 years ago was less than 1,000 homes a year, representing less than 0.1%. The building of imported housing started growing dramatically from around 1994. This was a result of the strong yen at the time, which made it extremely advantageous to import home building materials and components. However, housing starts for imported housing have not fallen and have maintained their strong growth even though the yen has continued to be depreciated. This is the result of a growing awareness among consumers of the high performance in imported housing, including their insulation and air tightness and an understanding of the attractive designs, layout functionality, and design concepts of imported housing. Therefore, imported housing is becoming recognized by consumers as homes that can fit their lifestyle. Combined with promotion by housing-related agencies, more and more Japanese consumers are expected to select imported housing along with their lifestyles being more diversified, resulting in a greater expansion of imported housing.
This boom is not limited to imported housing. High-performance materials (such as wooden or plastic window sashes using insulated glass) and nontoxic interior materials have also started to be imported and used on a wide scale. These conditions suggest that the market for imported housing and imported materials will continue to grow in Japan. An attractive market is considered to be open for foreign manufacturers.
Attractive Points of the Japanese New Home Market
The number of housing starts reached 1.63 million units in fiscal 1996, the first time since 1990 that the 1.6-million-unit level had been exceeded. This was due to low interest rates, demand from rebuilding efforts after the earthquake disaster, and increased demand from the rush to build before the increase in the consumption tax. Beginning in fiscal 1997, however, consumers have been reluctant to make purchases, primarily due to the recession. Recently, housing starts have dropped to about the 1.20-million-unit level. Although demand is expected to increase temporarily when the number of households peaks in a few years, the growing trend to have fewer children will result in fewer households, and some analysts expect the number of housing starts to drop below 1 million in ten years.
Thus, although the overall trend for new housing starts is on the decline, a market of 1 million housing starts is not a small number. (For instance, according to U.S. Housing Market Conditions, the number of new housing starts in the United States was 1.569 million units in 2000.) Also, in the supply of housing, the major issue will not be providing quantity, but providing high-quality housing stock. Therefore, these market conditions are attractive for foreign manufacturers who supply high-quality, high-performance imported materials. Changes in New Housing Starts and Housing Starts by Owner-occupant Relations (Based on Single Housing Units)


Rapid Changes in Import of Housing Materials
Housing starts in 2003 are estimated at 1.15 million, or the same level as 2002. This is based on the fact that in June housing starts increased significantly by 13.4% over the same month of 2002, and that in the period July, September and October they remained above the same period of 2002. In this issue we outline trends and changes in the import share of major housing materials in the past 5 years, including the first6 months of 2003, based on Japanese Import Trade Statistics.
1.  Prefabricated buildings: HS-code 940600010 Imports of prefabricated buildings continue to decline slightly from their peak of 11,797 units, ¥23.1 billion in 2001 (See Chart 1). Imports from Canada account for approximately 45% of the total value. Imports from Finland increased during the first half for the third successive year and expanded their share to 22%. Sweden was the third largest exporter, with a share of 17%. The U.S. share, which was 20% in 1998, has dropped steadily and now stands at 3% in 2003.
Market Trends for Imported Housing and Related Materials
Data relating to newly built imported housing and imported housing materials in Japan are shown below and are based on survey results announced on December 25, 2003.
The survey was conducted jointly by the Ministry of Land, Infrastructure and Transport, the Ministry of Economy, Trade and Industry, and the Japan External Trade Organization (JETRO).
The survey was sent to 2,023 imported housing and housing material-related companies, with 329(16.3%) of the companies responding. In this survey, “imported housing” is defined as “housing that is designed based on concepts originating outside of Japan1 and that is built as single housing units, using individual materials that are imported separately or imported as a package, or that is built using a considerable amount of imported parts and materials.”
1. “Designed based on concepts outside of Japan” refers to housing layouts, ways of living and other factors that have been incorporated from non-Japanese cultures.
2. “A considerable amount” means that the amount of parts and materials that are necessary for building one housing unit exceeds 50% of the required amount.
Number of imported housing
The number of newly built imported housing units in FY2002 was 7,781 (based on building confirmation), down 3.8% from the previous fiscal year. It is estimated to be 8,510, up 9.3% for 2003. Share of imported housing by construction method framework (2x4 and the like): 87.5%, log houses: 9.7%, post & beam: 2.0%.
Share of imported housing by country of origin Canada: 35.7%, USA: 29.6%, Sweden: 25.8%.


Average construction cost In FY2002, the average construction cost was ¥523,000/3.3m2, up 3.4% from the previous fiscal year. Countries from which suppliers are interested in starting or expanding material imports in the future (multiple responses possible) China: 19.5%, USA: 17.0%, Canada: 14.9%.

7. Canada
Prefabricated Building Exports
Sixty-seven percent of total Canadian exports of prefabricated buildings originated from British Columbia and Ontario in 2002. Prefabricated building exports from British Columbia were $209 million in 2002 and increase of 4 percent compared to 2001. British Columbia's exports of prefabricated buildings to Japan accounted for 52 percent of its total exports in 2002 and reached $109 million. The United States, mainly the states of Washington, California, Colorado and Alaska accounted for 42 percent of British Columbia's total exports in 2002 at $88 million. Prefabricated building exports from Ontario were $197 million in 2002 a slight decrease from 2001. The province shipped 86 percent of its total exports to the United States, mainly to Pennsylvania, New York, Michigan, Ohio and Illinois. For all of the other provinces, United States also remains the largest market destination of Canadian exports of prefabricated buildings.
Mobile Homes
Exports of Canadian mobile homes in 2002 were $27 million, an increase of almost 69 percent from 2001. United States accounts for 98 percent of Canadian mobile home exports. Major markets for Canadian mobile homes were the states of California, Michigan, Florida, and Colorado with imports valued at $3.6 million, $3.1 million, $2.5 million and $1.3 million respectively in 2002.
Construction in Canada
Canadian real GDP growth in 2002 more than doubled over the 2001 rate to 3.4 percent. While the weak currency was a factor in stimulating strong exports, it was Canada's domestic economy that leads the resurgence. Canadian housing starts in 2002 achieved their highest level in almost two decades increasing by 26 percent compared to 2001. Total housing starts in 2002 were 205 thousand. Construction activity in all areas of the country was strong with housing starts in Quebec leading the way, increasing by 53 percent compared to 2001.
International Trade
For the fifth year in a row, total exports of Canadian prefabricated buildings increased in 2002. While the rate of growth slowed considerably from the very rapid rates recorded in the past few years, it still grew by a very respectable 7.7 percent. Exports of prefabricated buildings totaled $604 million in 2002, compared to the $561 million in 2001. The US continues to dominate as the primary destination for Canadian exports accounting for 70 percent of all prefabricated building exports. Canadian exports of prefabricated buildings to Japan continued to steadily improve for the third straight year but are still well below the 1997 peak. The other world markets for Canadian exports of prefabricated buildings also bounced back in 2002, after a significant downturn in 2001.
Imports
Canadian imports of prefabricated buildings decreased by 6.9 percent to $108 million in 2002. The United States was the main supplier of imported prefabricated buildings to Canada accounting for over 92 percent of the total. Metal prefabricated buildings represent the largest share of imports at $77.3 million. Wood prefabricated buildings imports are $2.7 million and silos, prefabricated are $4.3 million. All other types of prefabricated buildings and components were $23.1 million in 2002.
Exports to the United States
Exports of prefabricated buildings to the United States grew at a slower pace in 2002 but still increased by 6.1 percent over 2001 to $425 million. The reason for this overall slower pace of exports to the US was due to the decline in exports in two of the regional markets, the US West and the US South.
In 2002, the US Northeast became the largest regional market for Canadian exports of prefabricated buildings in the US. Overall exports to this region increased by 25 percent compared to 2001 to $161 million. The state of Maine has become the largest single market in the region in 2002 increasing by 44 percent over 2001 to $31.4 million, followed by Pennsylvania which increased 82 percent compared to 2001 to $28.2 million. Exports to New York State have dropped for the third year in a row to $27.7 million.
After becoming the largest importing region in the US for Canadian prefabricated buildings in 2000 and 2001, the US West declined slightly in 2002 to $126 million and is now the second largest market behind the Northeast. Washington State, which is both, the largest market within this region and the leading export market for Canadian prefabricated buildings in all of the US was $36 million in 2002. California and Montana are the other leading markets in this region for Canadian prefabricated buildings with imports of about $15 million each.
In 2002, North Dakota replaced Michigan as the number one importer in the US North Central Region of Canadian prefabricated buildings. Total exports to the region for 2002 were $71 million, an increase of just 1 percent over 2001.


Exports to the US South were down 1 percent to $66.2 million in 2002. The weak export performance was due to lower exports to several key states, notably Florida and North Carolina, with decreases of 5.5 percent and 22.4 percent respectively. However, exports to Texas increased by 14.4 percent to $14.5 million and some emerging states, Tennessee and Kansas grew by 125 percent to $4 million and 232 percent to $3.4 million respectively.

Offshore Markets
Trade to offshore markets excluding Japan represented 10 percent of Canadian prefabricated building exports in 2002. The Japanese market represented 20 percent of Canadian prefabricated building exports in 2002. Total exports of Canadian prefabricated buildings to Japan in 2002 were $122 million, up 2.3 percent from the $119 million in 2001.
Demand for Canadian prefabricated buildings in the rest of the Asia-Pacific region increased in 2002 by over 65 percent compared to 2001. Total exports of prefabricated buildings to this region were $8.3 million in 2002. Growth in Canadian exports to other Asian economies such as South Korea and India was quite significant in 2002. In India, exports were up more than 1200 percent to $1.6 million, while South Korea grew by 17 percent to $3.6 million in 2002.
Canadian prefabricated building exports to the EU in 2002 increased 2.4 percent compared to 2001, to $21.5 million. The United Kingdom has become the most important market in the EU accounting for 35 percent or $7.6 million in 2002. France, Germany and Spain are the other leading markets in this region for Canadian prefabricated buildings with $5 million, $3.3 million and $1.2 million respectively.


Top 20 Offshore Importers of Canadian Prefabricated Buildings (Thousands of dollars)

Rank

Country

2001

2002

% Change

1

Japan

121 660

118 901

2.3

2

Algeria

440

12 300

2695.5

3

United Kingdom

5400

7100

31.5

4

France

4800

4800

0.0

5

Germany

2700

3300

22.2

6

South Korea

3100

3200

3.2

7

Kuwait

-

1800

100.0

8

Romania

-

1800

100.0

9

India

120

1600

1233.3

10

Jamaica

390

1400

259.0

11

China

730

1100

50.7

12

Spain

1100

1100

0.0

13

Italy

1100

990

-10.0

14

Ireland

590

910

54.2

15

Cuba

2100

900

-57.1

16

Bermuda

130

880

576.9

17

Switzerland

990

820

-17.2

18

Singapore

100

670

570.0

19

Turkmenistan

-

630

100.0

20

Australia

580

600

3.4

Source: Statistics Canada

8. India
The Indian government acknowledges that there is a severe shortage of housing units in the country. The shortage of housing units is officially estimated to be in excess of 17 million units although some observers believe it to be as high as 33 million units. Housing start data is generally unavailable although the US Embassy estimates them to be between 20-25 million units annually. While about 8% of total housing starts are multi-family units, the vast majorities are single family units built in urban locations (49%) or rural areas (43%). The majority of urban housing starts utilize clay bricks as the primary construction material while the majority of houses in rural areas utilize indigenous construction materials, such as mud bricks, sticks and stones.
Historically, houses were built from wood in India, with builders favoring the use of highly durable teak lumber. However, widespread deforestation and the resultant decline in lumber availability forced the construction industry to begin using steel and cement for residential structures. Today, few homes are built from wood, although the National Building Code of India (1970) in Part VI (Structural Design), Section 3 (Wood) allows the use of wood in residential construction. Despite the tradition of using wood to build homes, the contemporary experience of using concrete and steel has fostered a widespread perception that wood buildings do not perform well in India. The major concerns of builders and homeowners are focused on the ability of wood to resist termite attack and its durability in the hot, humid climate found in the south of India.
With annual housing starts are estimated to be in the 20-25 million units range.

9. Philippines
The Philippine government reports that there is a severe shortage of housing units in the country, particularly for the urban poor in Metro Manila, and is estimated to be in excess of 5 million units. Despite this shortage, housing starts in the Philippines rarely exceed 100,000 units, with the majority of these generally being single family residences, Figure 4. Since 1996, single family residences have generally accounted for approximately eighty percent of total housing starts in the Philippines. Both the number of units and total floor area saw a sudden increase in 2001 reversing a five year trend of decline. In contrast, the average floor area and average value of new single family homes continued their steady climb, Figure 5. Most industry experts attribute this trend to increasing confidence in the economy, the availability of low interest rate mortgages, and the slow expansion of the middle class. Despite the increase in 2001, most industry experts expect that housing starts will remain fairly constant in the foreseeable future.
Historically, houses were built from wood in the Philippines. However, a strong effort by US cement manufacturers immediately following World War II resulted in the adoption of cement blocks and reinforced concrete as the building materials of choice. As a result, very few homes are now built from wood, although the building codes do not restrict the use of wood in residential construction. Rather, there is a widespread perception that, despite the traditional use of wood as a building material, wood buildings do not perform well in the Philippines, particularly with respect to termite resistance and durability in the hot, humid climate of the Philippines. Until fairly recently wood was often used for rafter systems in single family homes, but a strong marketing effort by the steel industry has been successful in almost completely displacing wood in this end-use.


Many builders also appear to be moving towards the increased use of wood fiber-cement lumber as the material of choice for exterior siding. This trend has been attributed to the perception that wood fiber-cement siding outperforms lumber in the tropical climate of the Philippines where frequent typhoons and the hot, humid weather adversely affect the performance and durability of solid wood siding.
The most common construction technology used in single family homes in the Philippines is based on the use of cement blocks and reinforced concrete. Single family homes consist of a cement slab and foundation built from reinforced concrete with a combination of cement blocks and reinforced concrete being used to build the walls
An alternative construction method that is used less frequently is referred to as the hybrid construction system. In the hybrid system, the slab, foundation, and first floor of the house are built in the manner described in the previous paragraph. However, the hybrid construction system incorporates wood framing for the second story of the house, including using wood joists in building the sub-floor system between the
first and second floors of the house. Wood rafters are used to frame the roof system. The total number of housing starts expected to remain constant at approximately 100,000 pa

10 Thailand
Thailand’s single family homes have traditionally been built largely of wood. Like Japan and the US, Thailand has historically been a wood-based housing culture. The use of wood has actually grown over the past two decades to 1996, but most of this growth has been in the rural and non-metropolitan areas. Rapid urbanization is taking its toll on the growth of wood as a construction material and in the past six years since these statistics was compiled, the use of wood may be declining. The proportion of urban residents increased to an estimated 30% of the population in 1996 from 13% in 1970. Most are concentrated in the Bangkok Metropolitan Area, which has a population exceeding 10 million, out of a total population of just over 60 million. The total volume of wood used in the construction market has no doubt dropped due to urbanization.
The traditional and typical wood construction method for single family construction is post and beam, using tropical hardwood species such as teak and rosewood for the higher end homes. For wood homes, both luxury resort homes and modest rural homes, the wood structure is typically supported by stilts made of either wood or a concrete or cinder block. This constitutes a kind of hybrid construction, which is widespread. The practice of elevating the living space above the ground serves several functions: it protects the living area from flooding, it provides extra storage space, and helps protect the wooden structure from attack by termites.
Non-wood Single-family Home Construction
The cement slab and foundation of a masonry home in Thailand is built from reinforced concrete with a combination of brick and reinforced concrete used to build the walls. The vertical columns of reinforced concrete are placed at the corners of the house and at intermediate locations along the walls. The reinforced concrete columns extend the full height of the building and are tied into the foundation of the house with steel rebar. Fill material of brick is then used between the columns and forms the curtain walls of the house, perforated with windows and doorways. The brick fill wall is then smooth coated with a skim layer of concrete on both the exterior and interior, to provide a plaster-look finish.
When the first floor wall has been completed, a band of reinforced concrete is laid atop the wall and is tied into the vertical columns with steel rebar. It is this network of vertical and horizontal reinforced concrete bands and columns that provides the structural framework of the home.
After the wall system has been completed, steel rafters are used to form the structural framework of the roof system. Heavy concrete or ceramic tiles are hung directly on the steel roof system. The main use of wood in this brick and mortar construction system is for concrete forming, scaffolding, and framing around doors and windows.
The sub-standard housing stock sheltering Thailand’s 62 million people should result in great pent-up demand for quality housing as the economy continues to improve. However, despite the efforts of the Thai government to improve the quality and quantity of the housing stock, annual housing starts have been consistently below 100,000. The real estate industry began improving in late 2000, led by steady recovery in the middle-class housing market. Various factors besides the economic recovery have led to the improvement in housing demand. Momentum is being created by low interest rates on home mortgages – as low as 4% for the first year at some banks. This is boosting demand while new supply continues to be limited.
House registrations by housing project developers rose by 49.1 percent in the first nine months of 2002, boosted by the government’s tax incentive programs and low banking interest rates. The tax promotions were extended until the end of this year but the growth might not be outstanding after the peak demand was reached last year (Financial Times Info Division January 2, 2003).

11. El Salvador
Housing Market Assessment
To consider the size of the housing market we examine household formations as
the major factor determining housing starts. Marriages (as a proxy for household formation) in El Salvador are about 25,937 in 1998 or 4.3 per thousand inhabitants.
El Salvador’s population in 2000 is 6.28 million, and is expected to increase to 8.534 million in 2020. Government sources estimate that about 25,000 houses were built
in 2000. By 2020 marriages could reach 35,000 suggesting an increase of about
10,000 units over 2000 levels. Relative to other markets, the number of housing starts
is small.
Currently, the construction method for almost all housing is hollow cement block with little wood use. The majority of the houses constructed are partially or wholly financed by the public sector. High-end homes are also built in El Salvador but the number varies and is usually less than 1,000 annual housing starts. Condominiums and apartment complexes are few, but may represent an opportunity. High-rise construction is notably absent in El Salvador due to frequent earthquakes.
The recent earthquake has increased interest in prefabricated units. The units require a quick setup time and low costs from $5,000 to $10,000. These housing units were in demand for 2002 due to relief efforts associated with the 2001 earthquake. Frequent natural disasters provide opportunities but have not led to greater wood use. The use of wood for housing under these conditions must be regarded with care because of the perception that these structures are temporary or of low value. There have been at least three destructive earthquakes over the past three decades. The most recent earthquake led to the purchase of all available non-wood laminates and cement blocks in Central America, with a need for more materials coming in from other regions. Wood was introduced but its use met with resistance.

12. Panama
Panama’s area is slightly less than South Carolina; about 30 thousand square miles. It ranks 16th in area (1 = largest), 20th in population (1 = highest) and 11th in population density (1 = lowest) among 20 Latin American countries. It has a large financial sector, with major banks from around the world. It also controls the Panama Canal, a strategic waterway. The GDP growth peaked in 1997 at 4.7% and is estimated to be less than 1% in 2001 and 1% in 2002. (10)
Panama’s investment in housing in 1990 and 1999 was 41.1% and 56.7, respectively of all construction investments. The construction sector, which had expanded annually over the past several years, was in recession. It contracted by 9.7% in 2001 and another 8% during 2002. The construction sector accounts for roughly 5% of
the GDP. GDP outlook is optimistic for 2003 with growth rates reaching historical rates of 3 to 4%. The construction is primarily hollow cement brick with little wood use. High-rise condominium and apartments are constructed in Panama City. Wood frame housing construction is prohibited by fire code regulations within the metropolitan area.
Housing Market Assessment

Again, we use marriages as a proxy for household formation and the demand for housing. Marriages in Panama were estimated at 10,357 in 1997 or 3.8 per thousand inhabitants and may reach 15,000 by 2020. Panama’s population in 2000 is 2.86 million and expected to increase to 3.622 million in 2020. It has a large urban population in Panama City and high-rise units are constructed. Its housing sector is currently in contraction due to a slow down in construction activity. There are currently many vacant high-rise condominiums and apartments in Panama City. The site visit revealed several construction projects that have been placed on hold. The small housing market and large

urban population reduces the size of potential wood-frame housing in Panama substantially.
Opportunities and Constraints
Wood framed housing is currently constrained by fire code regulations in the metropolitan area. Wood use outside of the metropolitan area is the only opportunity to increase the potential for wood use in housing. Within the metropolitan area, wood use is constrained to concrete forming and millwork.

13. New Zealand
QUALITY PLUS –THE NEW ZEALAND HOUSING STORY
Industry Snapshot
New Zealand housing manufacturers have developed an export market for kitset housing – a range of completely pre-fabricated accommodation units shipped in “knocked down” form – for easy assembly in the country of destination.
Products
Companies supply everything from pre-cut, flat-packed products, through to full supply and building contracts. Products include: accommodation units that range from basic shelters to luxury resort complexes, designed to suit a wide variety of customer and market needs; a choice of building systems from suppliers who offer a wide range of customizable building designs, largely based on the use of New Zealand’s renewable, plantation-grown radiate pine resource.
Export Market
Estimated at NZ$70 million (2000). Est. NZ $140-160 million (2006)
Markets
New Zealand suppliers of kitset homes export to customers throughout the Asia/Pacific (including Japan, Korea, Taiwan, China, Vanuatu, Cook Islands and Australia), Europe and the USA, including Hawaii.


Key strengths
-    a plentiful, renewable, durable wood resource
-    a reputation for quality
-    competitive pricing
-    an ability to provide customers with solutions designed to meet their specific  housing needs
-    full supply and building contracts

Updated- October 2002
You can find them perched over the azure waters of a Tahitian resort or high in the snow-clad mountains of Japan. Prefabricated houses created in New Zealand are being exported around the Pacific and beyond, generating an estimated revenue of about NZ$70 million a year in 2000.
While they range in value from luxury resort buildings complete with well-appointed kitchens and bathrooms, through to basic house shells, these kitset houses all share the advantage of being easy to erect by semi-skilled people. They come in prefabricated pieces, cut and factory pre-finished to design requirements before being shipped. Once on site, they need only to be re-assembled.
This makes kitset housing an ideal option when time, skilled trades people or local building materials are in short supply. One market in which they’re proving popular is resort development – currently a major export niche for the New Zealand-made kitset buildings. One company active in this market, Signature Building Systems International Ltd, is supplying 103 housing units for an up market Sheraton resort in Bora-Bora. It has provided walkways, bungalows, infrastructure buildings and staff accommodation units for similar projects in the Maldives and in the past five years has notched up a 2600% increase in business turnover. About half the company’s housing production (roughly NZ$20 million) is now in the export market. Signature is also exporting housing to Asia with a major emphasis on the Chinese market. Other potential large-scale markets include accommodation for construction projects (particularly in more remote areas), or emergency shelter in places such as Gujarat – the state in India devastated by an earthquake last year.
However, kitset homes also have a growing role in the general housing or holiday home market, with Kiwi-made kitsets being erected in countries as far-flung as Japan, Korea, Taiwan, China, Vanuatu, Cook Islands, Australia, the USA and even Germany. The Asia-Pacific region generally provides the bulk of business.
Japan has proved a good market for specialized suppliers who have pitched their product to meet that country’s demanding building criteria.
For example, Auckland-based Tristyle International Ltd has developed their "Insulframe", a high-insulation, rigid foam building system, which targets the environmentally healthy home market where insulation and air tightness is an important consideration. Used either with Tristyle's log house construction or their 2x4 timber frame system, it is specifically designed to comply with Japanese building codes. Insulframe sales in North Asia and the Pacific are worth $8 million this year, with Insulframe systems used for developments in Sapporo for the Japan’s rapidly growing aged care market.
The wide use of New Zealand Pine in Tristyle's buildings is hugely popular with the Japanese for interior living harmony. This material, combined with Tristyle's high insulation and advanced aluminum joinery systems developed for the extreme climatic conditions in Northern Japan, has created new, high performing and attractive buildings for this growing market.
The company is also expanding into Hawaii, with growing sales of its custom designed InsulFrame® Log and 2 x 4 Homes. Tristyle has formed a partnership with Interisland Construction Inc to develop the market for high quality New Zealand homes, and the opening of their joint venture display centre in Honolulu towards the end of this year will boost the profile of New Zealand building products in a lucrative market. Demand in the Pacific region for Tristyle's prefabricated housing systems is also growing. In Tahiti, for example, there is a call for high quality, residential and resort accommodation. Tristyle's IT designs, delivery and communications systems between its international markets allows an excellence in customer service which is helping boost the company's export business.
New Zealand manufacturers of kitset homes use a range of different building systems, from insulated panel structures and log homes to more conventional “2x4‟- timber framing. However, most take advantage of a local building resource that is renewable, attractive and in plentiful supply – pine grown in this country’s extensive plantation estate. Kiln-dried pine provides the 2x4 wall framing and roof structure for the homes primarily used for bulk supply orders. Bungalows for the Bora-Bora resort complex, for instance, comprise framing timber (treated to the requirements of local conditions), exterior weatherboard and timber or gibe-board lining inside, plus window and door joinery. The pine-log look fits comfortably into the alpine environment of Japanese ski resorts and has been used for holiday homes there as well as larger-scale resort buildings. Solid-wood board systems – sometimes called wall bricks because the smoothboards stack to form factory finished walls – also provide the advantage of simple assembly and a natural finish.
An example of this is the Conecta system which consists of just four main components: profiled, solid-wood boards precision drilled with evenly spaced holes; heavy-duty steel tie-down rods that anchor the building from the roof to its foundations; bracing co-pins made from high-impact plastic; and aircraft-grade aluminium connectors that lock the walls together. The boards are slid into place following a numbered plan with no need for measuring, plumbing, leveling or even using nails or brackets. As the walls go up, the windows and doors are slipped into place.
The plumbing is installed during construction, and the electrical wiring is normally done afterwards. Although simple, such solid-wood building systems offer unlimited versatility in terms of size and design complexity. One of the industry’s most established players is EP Madden Ltd. From a one-man operation established in 1898, Maddren has grown into a substantial business employing more than 120 staff with an annual turnover in excess of $30 million.
Maddren focuses on supplying clients with cost effective, quality solutions. Its housing division specialists in crafting pre-fabricated architect-designed contemporary homes. New Zealand kitset house suppliers are able to offer a wide range of standard house designs but can work to the design and engineering needs of specific customers. For instance, buildings destined for cyclone-prone areas are engineered to tougher standards than those heading to gentler climates; insulation and cladding requirements vary according to local climate conditions; and the Kiwi “can-do” attitude provides housing solutions pitched to particular design and price parameters. The customer also rules when it comes to the level of completion. Kitset buildings may include plumbing and wiring, complete kitchens and bathrooms, even home security systems, cable television, computer wiring, interior décor, or a wine-stocked fridge.
Markets looking for bulk supply tend to want only the shell, or “lock-up” kit with joinery and lining. Developers or building contractors in the destination country determine whether local material and suppliers are used for such finishing touches as roofing, cladding, fixtures, fittings and white ware.
Kitset housing suppliers usually supply technical advisors who can train local people in the particular building system, or educate them in the use of pine as a building material in areas where it is not normally used. The kitset housing market has plenty of potential for growth. Despite transport costs, New Zealand suppliers gain price advantages from the lower value of its currency in markets such as Japan, Korea and the USA. This country is now generally recognized as a leader in the supply of quality kitset (prefabricated) housing products created by skilled trades people.
14. Iran
In recent years, Iran’s construction market has been thriving due to an increase in national and international investment to the extent that it is now the largest in the Middle East region
The annual turnover in the construction industry amounts to US$38.4 billion. Statistics from March 2004 to March 2005 put the number of total Iranian households at 15.1 million, the total number of dwelling units at 13.5 million, signifying a demand for at least 5.1 million dwelling units. Every year there is a need for 750,000 additional units as young couples enter on married life.
At present, 2000 units are being built every day although this needs to increase to 2740 units. In addition, Iran’s geographical position over a seismic belt necessitates the reinforcement and renovation of housing in Iran. This is possible only through a boom in real-estate development and foreign investment.
Restoration of old buildings is one of the priorities for the Iran Government. Estimates show about US$143 billion needs to be allocated in the next 10 years for restoration of 14,000 old and critically decaying buildings. The government will earmark 11.5 per cent of the funding the rest will be supplied by public investment and bank loans.
Opportunities
The Iran construction market is potentially ripe for the import of construction material to accommodate local demands. According to the statistics presented by the Iran Imports Book, which is published by Iran Customs Office, Iran’s major imported items include:
• iron and steel (iron slabs and steel, iron and steel bars, rolled iron and steel wares~
• pre-fabricated buildings
• elevator wares
• block and tackle
• road-building machinery
• digging and excavation machinery
• cranes
• hygienic products made of plastic and china
• stonewares
• plaster and cement
Other imported items are: glass, timber flooring, lighting, paint, electrical and electronic fill and accessories, lock, key hardware and aluminium for façade design.


Competitive environment
The housing industry is one of the few segments of the Iranian economy where state capital shares as little as two per cent of the market, and the remaining 98 per cent is private sector investment. There is little red tape or hurdles and, as a result, through launching mass development projects, the use of new technologies and fast-pace project execution, a larger portion of the housing market is accessible. This is also true for new construction materials technological advances. Thousands of foreign firms, mainly Chinese or European, have established agents in Iran or partnerships with domestic manufacturers, both investing directly in the housing market and targeting other Persian Gulf markets.
Other Countries
World-wide there is evidence of an epidemic of house shortages. This combined with a global desire to develop and utilize the pre-fabricated housing industry bodes well. In addition to the above countries there are others that present opportunities. India has an official estimate of 17 million houses with annual housing start estimates of 20 – 25 million units.
Similar stories can be told for the majority of countries analyzed. An interesting feature is the growth of Asian-Pacific region in the past few years.
Competitor Analysis
A competitor analysis was conducted of the leading players globally in the large-scale premium prefabricated housing. It was found the premium end of the pre-fabricated market is one which is quite fragmented, where similarities in successful business models is restricted and where the level of internationalization is low.
As a result pricing is not a great indicator of competitiveness due to the varied level of completion and finishes available.
Market Innovation
Many of the leading US companies featured have adopted a vertical model inclusive of financing, insurance and other services giving buyers a full turn-key solution hence the “exportability” and global reach of such a model is limited.
Only the innovative Finnish timber processor and manufacturer Honk is attaining substantial economic penetration into international markets with its log and timber constructions in Nordic pine. The company whilst small in term of units sold in key markets where it is present, such as the US, it’s centrally managed and produced fabrication process out of its plants in Finland to all global markets is instructive as a case study.


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