Revolutionizing Portuguese Housing: The Promise of Modular Construction w/ Bond Housing Systems

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Hello and welcome to Inside Modular, the podcast of commercial modular construction brought to you by the Modular Building Institute.
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Welcome everyone.
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My name is John McMullen.
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I'm the marketing director here at MBI.
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Today, I'm joined by Diogo Roscofsky, head of business development at Portugal-based Bond Housing Systems.
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Diogo is here to talk about the state of housing in Portugal and how his company plans to make a difference using modular construction.
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Diogo, welcome, hi, john.
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How are you?
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I'm very well.
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How are you Well, good?
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Well, dive right in.
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Tell me about yourself, diogo.
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What's your background and how did Bond Housing Systems come to be?
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Sure.
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So I'm Diogo Rutkowski.
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I'm 30 years old, I'm married with one little daughter.
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As you can probably tell by my name, I'm half Portuguese, half Polish.
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Personally, I love traveling, so I've done more than 70 countries.
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I love cinema almost a thousand ratings on IMDb, I'm a huge fan and, finally, I'm a music lover, so a records collector.
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I'm passionate about entrepreneurship and that is one of the reasons that I've joined this challenge.
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On a work-life topic, I got a degree in economics and a master in international management, so my background is very different from what I'm doing now.
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I got over seven years experience in marketing strategy, innovation and business development, particularly in high growth segments and channels.
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I've worked in Unilever, ben Jerry's and then on.
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I've always been passionate about creating a better future for consumers and planets, and that's why I've accepted this challenge in Bond Systems.
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Also because I like change and I wanted to try a new category.
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I've been in consumer goods, as you can tell, for a long time and I wanted to explore a different thing as well, following this purpose on just doing better for consumers and for the planet, and so Bond Systems had a purpose that was aligned with what I was looking for, and they were looking for someone that had the strategical mindset that not only well, it could be from the construction industry, but ideally the more kind of strategical backgrounds that could work together with more technical people to really revolutionize the construction industry in Portugal.
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And so, yeah, this is who I am and why I joined Bond Systems.
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It's incredible to understand how a different background can really help these type of businesses.
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Well, it is quite a background, and I love the fact that you're so into films.
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I'm going to have to find some of your ratings on IMDb.
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I think that's awesome.
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I'm a film lover myself.
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How does, how does Bond operate?
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What's the company's main goal?
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So, if we start with the sector, it's a Portugal-based company addressing kind of social, economic and environmental issues in construction.
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We are dedicated to deliver end-to-end residential projects that could leverage modular construction technology into the traditional technology, providing a faster, more efficient and high quality buildings that can still meet the European standards.
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So we are not producers ourselves, but we do integrate modules produced by different suppliers across the world.
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And what makes us stand out more it's actually our commitment I was mentioning before Our name.
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Bond was created to symbolize our purpose, which is creating this kind of meaningful connections between individuals and the urban spaces that we design, fostering this kind of vibrant and inclusive communities.
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So we believe that using factory produced components, we can really achieve great precision, reducing waste, accelerating timelines.
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Achieve great precision, reducing waste, accelerating timelines, so we can really change this kind of industry that has been stuck for a little while and bring a more sustainable and fast alternative.
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How would you describe the current state of housing in Portugal?
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What specific challenges need to be addressed to improve the housing market there?
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Well, that's a really good question, because everywhere you read or like, if you open a magazine, if you watch the news on TV, we always talk about the housing crisis.
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It's a hot topic in Portugal and the issue in here and the challenge is that we are reaching critical levels.
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More than 136,000 homes are needed in Portugal urgently and that's because most of the places are overcrowded.
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A small portion is because of people living in shacks or improvised housings, but the big issue here is overcrowding places and this is due to three main reasons.
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The first one is the average selling price of a house has increased by more than 80% in the last decade.
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So if you compare it to the European Union, the income growth has been quite in line with Portugal and the European Union around 36%, but the housing price in Portugal has been, as I told, around 80%, but in Europe an increase of 40%.
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So that's kind of a mismatch between Portugal and kind of you understand the bigger issue which is in Portugal versus the other markets.
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The second bigger issue here and which causes this kind of critical levels in housing shortage, is that the number of dwellings that were produced are decreasing a lot.
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So less than 80% versus the 2000.
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So around 2000, you could see per year being built like 130,000 dwellings, but then in 2015, you could see that the number of dwellings that were built were below the 10,000.
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So there's a huge mismatch between supply and demand.
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And finally, the biggest issue here as well, is the shortage of construction workers.
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So there is a shortage of 90,000.
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And with the new airport being built in Lisbon, we will need 15,000 more workers.
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That's the expectation, and if you look at wages and construction costs, it's just like increasing.
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So, um, yeah, there's a big challenge in in housing.
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This is only the market side.
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We can look at environmental and social issues as well, right?
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So if we look environmentally in portugal and if we look globally, 37% of global emissions are due to the construction sector and in Portugal, specifically, if you look at the energy efficiency, around 90% of homes in Portugal have low energy efficiency, which in Portugal means C, e, d and F levels, and in Portugal, actually 50% of homes were built before 1980s, so houses in Portugal are quite old and for the environment is quite significant impact.
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If you look at the social lands as well, there are very poor house conditions in Portugal, so 20% of the households in Portugal are not able to keep their homes warm.
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Households in Portugal are not able to keep their homes warm.
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Around 30% of homes in Portugal have leaks or molds, to a new EU average of 15%, and over 1 million people in Portugal feel isolated.
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So the context is quite complex.
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It's a kind of connection between the market issue, the environmental issue and, as well, the social issue, so it's a multi-layered housing crisis which requires an urgent innovative and collaborative solution.
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We are confident that Bond Systems can really offer the right solution for this and really accelerate the production of these homes.
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That's a complex web of challenges.
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To be sure, what opportunities are you seeing in Portugal amid all of these challenges?
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We are in an interesting phase where the government has changed and has set loads of measures to address the ongoing housing crisis.
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So they launched an initiative called Building Portugal and they set 30 measures for a new housing strategy as from May 2024.
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So they have a couple of measures and some of them really encourage supply, reducing bureaucracy and urbanistic administrative simplification.
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Some of them really promote young housing, so exemption from property taxes and other taxes.
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They also try to facilitate bank financing, and some of these measures were already implemented.
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There are others to be implemented, like promoting public housing.
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We are talking about the PRR, the plan of recovery and resilience, and what they want is to unlock funds to unlock 25,000 houses and, as well, enhance financing to develop additional houses in Portugal.
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So we are in an environment that is really pushing for more construction and more people to buy houses, to make it more affordable.
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I do believe that these opportunities create an opportunity to collaborate the private sector with the government and really developing this affordable and sustainable housing kind of solutions.
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And we do believe that Bond is really in line with this, because not only make sure that construction can be faster, but as well it really answers the social environmental issues building Portugal in a more eco-friendly and sustainable way.
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Given the landscape in Portugal now, with all of these challenges and what the government's trying to do to increase these resources to create more housing, how does bond systems fit in?
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What are you guys doing and what's your plan systems fit in?
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What are you?
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guys doing and what's your plan?
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So if we start with our purpose, that's exactly what we want to really connect the kind of market issue with the social and environmental kind of problems as well.
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What our company wants is to offer a fully integrated 10 key solution that is tailored to this kind of issues on a way that is efficient but sustainable as well.
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We combine expertise in market analysis, urban planning, module construction and energy solutions that are sustainable for these projects.
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That meets the needs of both communities and investors.
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So our approach starts with an in-depth market research and analysis for each specific location and clients to make sure that the initial layouts that we develop answer these needs.
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We really want to ensure that the solutions that we provide think with urban planning from their initial kind of layouts.
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So we make sure that the community is involved.
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We then move on to the off-site production phase, which is made on a factory with one of our international suppliers, and they do produce in a controlled environment, all with very good quality sets, which really ensures the construction time to be reduced.
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So while the soil is being prepared in Portugal, we start producing our modules, making sure that we can reduce the construction time overall.
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And finally, then there's the logistics parts, where our modules are kind of transported by boat to Portugal and then transported by land to the specific place we want to build, and they are really transported securely and the assembly is done by a local team together with our supplier.
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It's a really efficient kind of business model where we can really leverage on everyone's expertise, from our suppliers to develop something with quality from the factory but as well with the local civil construction companies that can work on the soil.
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We stand out by partnering with a couple of industry leaders.
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So UniHouse is one of our partners.
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It's a Polish supplier that produces in wood.
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We work as well together with Works, which is one of the real estate leading companies in Portugal, which facilitates a couple of contacts and expertise in real estate.
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We partner with Atomu Capital Partners, which provides not only the kind of energy solutions from the very beginning making sure that our buildings can achieve the certification of BREEAM and LEED, for example but as well integrates the solar panels if we need.
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We as well have a partner which is DUNN it's the name of the company that ensures the kind of design to build project and help us to to to kind of manage the project from end to end.
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And finally, you are one of the main partners, the Module Building Institute, which help us finding our perfect network from supply to any other partnerships.
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So, yeah, we do believe that leveraging this kind of partnerships.
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As I mentioned, we are an integration business.
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We believe that integrating all of this partners, we can really help achieving a good solution that it's speedy and with quality.
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So tell me about the projects that you're currently working on.
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Are there any details you can share about those?
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Sure.
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So we are working on kind of four different sectors, I would say.
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The first one is residential apartments, so multifamily projects.
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We are as well developing projects for student accommodations in Portugal.
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Senior living is the third area and finally, the workers' housing.
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And it's quite interesting to understand that although we have one product, the type of solution is very different according to the project.
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So we are on project phase in each of them, although our partners, for example UniHouse, had loads of expertise already in building tall buildings across the globe.
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So, yeah, these are the four areas that we provide solutions to.
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I heard you mention one of your partners specialized in wood frame modular.
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I believe you said what are the key advantages when it comes to the housing projects that you guys are working on.
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What are the key advantages for wooden modular structures?
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That's a really good question.
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So first of all, I think is around sustainability and versatility.
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So wood is a renewable and eco-friendly material.
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It balances strength with adaptability for diverse applications and is quite light weighted yet durable for efficient construction processes.
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We can talk about energy efficiency.
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So wood has excellent thermal isolation and keeps indoor temperatures stable.
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And keeps indoor temperatures stable it can reduce operational costs during or after being built.
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Obviously, and I think the third biggest advantage of wood is comfort and performance.
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So the kind of warmer living environments, the excellent soundproofing that it brings, the kind of good performance in terms of seismic conditions to adapt in different terrains, it kind of enhanced the overall living.
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So I think when you are within a wood apartment you can really smell the difference.
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That's the technical term I would say.
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How about steel modular buildings?
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Are you guys building those as well with your partners, and if so, what are the advantages of those?
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Sure, yeah, we do have a couple of partners that works with steel.
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I think one of the adventures is the strength and versatility, so it has quite a strength to weight ratio quite a high one to robust structures.
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It's easier to transport.
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Most of this.
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Suppliers produce in 2D instead of 3D, which is the wooden projects, so a couple of our suppliers in steel are able to produce in 2D, which means that for transportation is easier and then we just assemble in the land that we operate.
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I think as well it's about sustainability.
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So we know that wood is sustainable, but steel as well can be 100% recyclable and the process itself in the factory is quite streamlined, so it's quite efficient in terms of waste management.
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And finally, I think, it's durability and safety.
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Maybe it's highly resistant to fire, it's non-combustible and, yeah, it's quite resistant to seismic forces as well.
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So both of the options wood and steel are quite good, I'd quite good options for any type of construction.
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It just depends a bit on the type of project.
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So some of them are more cost efficient for some of the projects.
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But we should really take into consideration both options for any type of project and understand what's the most viable one for a specific layout.
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This has been great, Gio.
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I got one more question for you.
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Why is modular construction so important in addressing the housing shortage in Portugal right now, and not only right now, but in the years to?
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come.
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I think modular construction is the future.
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I think it's critical to address Portugal's current housing crisis.
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It provides a more efficient, more sustainable.
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It's a high quality solution that directly responds to the issues that I've mentioned around supply, affordability and environmental concerns.
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We are talking about a solution that has a higher speed of delivery, so modular construction can reduce building times by 50%.
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It's quite high and it can really contribute to the acceleration of return on investment.
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When we're talking about more in an investor point of view, it is well.
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If we think about the workers, it enhances the kind of on-site safety because there's less people needed in the local where we are building and, in terms of disrupting the urban areas, it's more friendly because we don't need to close so much roads, for example.
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I think there's a second kind of big bucket, which is the cost stability, because it's a standardized process that uses pre-order materials in factory, it really minimizes the variability of cost materials and it's less dependent on labor, where I mentioned that in Portugal is quite an important issue.
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Labor costs in Portugal in construction have increased by 8%, so it's an answer to that.
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Construction have increased by 8%, so it's an answer to that.
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And finally, on the sustainability point of view, modular construction is inherently more eco-friendly.
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It significantly reduces waste and the use of recycled materials can be higher.
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And then we know that traditional construction can use energy efficient solutions.
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But inherently, modular construction has energy efficiency in its heart.
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It's all done by precision in the factory and the materials that they use, for example wood, can be very, very efficient.
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So I think there is still work to be done in Portugal on demystifying the kind of modular construction People sometimes do think that it's of less quality.
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It's not.
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It can be as good as traditional construction or even better.
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It complies with all European certifications.
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It can ensure seismic safety, fire protection, excellent thermal and acoustic performance.
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So we are talking about all checks in here, and the materials we use are as durable.
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We can think as well about some solutions that can be for temporary workers that you want to just take off and change location, for example.
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But if you want to think on a durable project from the beginning, you can do it by modular, so it just combines both functionality and sustainability.
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Well, diogo, again I really appreciate your time.
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It's been a great conversation.
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Before we go, I'd be remiss.
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I know you mentioned partnering with MBI earlier in the conversation.
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We're hosting two events, two big events around the world.
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We'll be in Vegas in April and then, not too terribly far from Portugal, later in the fall, we'll be at World of Modular, Europe Again.
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I hope I get to meet you in person at one of those events.
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Thank you, John, for the opportunity and see you in the event no-transcript.