A Melbourne-based modular builder, Grove, is gearing up to transition its production line from government projects to the growing demand for affordable prefabricated homes. This shift comes as Australia grapples with a housing crisis, prompting an increased need for cost-effective residential options. Chief Executive Brenton Grove indicated that the company could potentially produce as many as 1,000 homes annually as it ramps up operations.
Grove aims to simplify home design, focusing on minimal variations to maximize efficiency. “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’,” Grove explained in an interview with The Australian Financial Review. This approach enables the company to offer homes at a reduced cost, passing savings directly to the consumer. For instance, if the building can be delivered $20,000 cheaper, that savings will be reflected in the final price for customers.
The modular builder has been in the industry for about 20 years, primarily serving state and federal governments through projects in schools, hospitals, and kindergartens. While Grove intends to maintain its government contracts, it is now focusing on expanding its reach within the modular housing sector. “We’re not wanting to build 20 or 30 or 50. We want to do a minimum of 1,000 in each state,” Grove noted.
One of the company’s strategic advantages lies in its ability to leverage its manufacturing capabilities to deliver homes at scale. “It’s a quick process to mobilise for us because we have the IP, we have the people. We just need a box,” Grove stated. The major hurdle remains market confidence, which they are actively working to overcome.
Grove is currently in discussions with at least two major developers regarding a model where residents—often retirees on tight budgets—buy a prefabricated home that sits on a plot in a housing estate, paying ground rent for the land. According to recent estimates from CBRE, there are approximately 40,000 land lease sites operating across Australia, with an additional 15,000 to 20,000 sites under development. This number is expected to grow as Australia’s population ages and more retirees seek affordable housing options.
Construction costs for these homes can vary widely, typically ranging from $350,000 to $600,000 per site. Residents can expect to pay between $700,000 and $1.2 million for new designs, while older models are priced from $400,000 to $800,000 according to the CBRE analysis. Grove’s pricing strategy aims to come in significantly below these estimates, with two-bedroom homes priced at $298,000.
These homes, measuring 127 square metres, can be constructed in only 15 days at Grove’s Pakenham factory, located in Melbourne’s southeast. The production facility has the capacity to deliver up to four homes daily, with an additional five days required on-site for final installation.
Grove emphasizes a value-driven approach, stating, “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.” This strategy mirrors the Costco model, where efficiencies gained in the supply chain are passed on to the consumer.
In summary, Grove’s ambitious plans to deliver affordable modular homes could significantly impact the housing landscape in Australia, particularly for retirees looking for cost-effective living solutions. With a focus on efficiency and value, the company aims to become a significant player in the nation’s housing market.
