Could listed companies drive the next phase of modular construction?

Originally established as a building products distribution, sourcing and procurement business, Western Australia-based ASX-listed Baumart Holdings (ASX: BMH) has steadily diversified its operations since listing in 2015. Its latest expansion into modular housing through the BuildMart Modular business reflects a strategy of using existing supply chain capabilities to participate further up the construction value chain.

Rather than representing a stand-alone investment in offsite construction, Baumart’s expansion reflects a broader strategy of extracting greater value from procurement, logistics and international sourcing capabilities already established within the business.

While much of the industry’s attention has focused on manufacturers establishing new factories, companies with established procurement, logistics and building products operations may already possess many of the capabilities needed to participate in modular construction.

Leveraging existing capabilities
The company’s supplementary ASX announcement provides greater insight into that strategy. Rather than manufacturing modular homes or acting as the project’s builder, Baumart is positioning itself as the sourcing and procurement lead, procuring modular housing systems before supplying them to CU Building Group, an independent licensed builder responsible for installation and assembly. The arrangement closely aligns with Baumart’s established procurement and supply chain operations.

Commenting on the project’s progress, chief executive Agata Dharma described the delivery of the first modular housing units as “a tangible demonstration of the speed and quality that modular construction can offer”, adding that the company looked forward to “showcasing the strength of this housing solution as the project advances.”

The company has described the initiative as a pilot project intended to prove the concept while assessing the economic and financial impact of the modular solution in an Australian setting. If successful, Baumart intends to more actively market its modular sourcing and procurement capabilities to other builders.

A different path into offsite construction
The strategy raises a broader question for the sector.

If modular construction can be viewed as an extension of procurement, logistics and supply chain management, could other listed building products and distribution companies pursue a similar approach?

Unlike traditional residential builders, procurement and distribution businesses already operate within complex international manufacturing networks. Many have established supplier relationships, logistics systems and procurement expertise that could be applied to modular housing without requiring them to become manufacturers themselves.

The supplementary ASX announcement provides greater clarity on Baumart’s strategy. Rather than manufacturing modular homes or acting as the project’s builder, the listed company is positioning itself as the sourcing and procurement lead, supplying modular housing systems to an independent licensed builder for installation and assembly. The model builds directly on Baumart’s established procurement and supply chain capabilities.

Whether Baumart’s strategy becomes part of a broader trend remains to be seen. However, it illustrates how modular construction is beginning to attract interest from listed companies whose competitive advantage lies not in manufacturing itself, but in procurement, logistics and international supply chain management.

If more listed companies adopt a similar approach, the next phase of growth in Australia’s modular construction sector may be driven not only by manufacturers, but also by established procurement and supply chain businesses expanding into the sourcing and delivery of modular housing systems while leaving manufacturing and on-site construction to specialist partners.

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