We are currently in the midst of the world’s largest human migration. It takes place mainly within countries, as a shift from the rural areas to the cities. This is most pronounced in poor and rapidly developing parts of Africa and Asia. New cities spring up. Existing ones grow beyond recognition. Over the next 30 years we will be building a new urban habitat for about a third of the world’s population. The way we will build those cities will lock in certain lifestyles and emissions for decades to come.

Therefore, we have to do it intelligently: in a way that is inexpensive, provides comfort and safety, saves local resources and keeps carbon emissions low.

A large piece of the solution can come from factories that enable a modular, industrial construction of buildings. The idea is simple: instead of building on a construction site, three dimensional modules (including complete kitchen or bathroom units) are prefabricated in a factory and then assembled on site in a matter of days. Modules based on lightweight construction can be stacked up, up to four floors high without additional static structures. If one pre-constructs a steel skeleton into which the modules can be slotted, the buildings can be as high as skyscrapers. The idea of modularisation is to provide a product that has standardised elements (thus bringing down cost), while offering a large degree of individualisation (in the way these elements can be combined). If you now picture a drab socialist building block, think again: the best architects could work on the buildings in the same way as some of our best designers work on our cars, which are also modular products, out of high-tech factories. As we speak, the first such modular housing factories are being built in Europe.

In a recent study, Wildemann and Grundke, outlined how industrialisation and modularisation of construction can reduce the cost of buildings by up to 76% (at constant building type and functionality). In addition, overall construction speed would be increased by 50%, and errors reduced by at least 90%. The entire process – from how a building is chosen and designed, to how it is manufactured, to how specific suppliers are integrated and finally how it is assembled on site – is optimised, digitalized and integrated. This is good for individual buildings. The real impact, however, will be felt, if this is implemented at scale: in our future cities.

By the year 2050 there will be an additional 2.5 billion people living in cities – 90% of them in Asia and Africa. India alone, will have around 440 million more urban residents by 2050. This is followed by China with 292 million and Nigeria with 212 million (UN ESA 2014). The number of mega-cities – cities with more than 10 million people – will rise from 10 to 41. However, the fastest growth will be in the medium-sized cities (up to 1 million inhabitants).

In order to keep pace with the rapid growth of the urban population, large-scale settlement and urban development projects are currently underway in various countries. This can be dramatically challenging. Take India’s capital Delhi as an example.

The old city of Delhi (Shahjahanabad) had originally been built in the 17th century for a hundred thousand residents. In the early 20th century, the British added their imperial capital “New Delhi” to it: a stretch of bungalows, roundabouts and tree-lined avenues to house around 50,000 residents. From these quaint days, Delhi grew to a city of 25 million by 2016. Surrounding towns, like Gurgaon or Greater Noida, are being swallowed up. Every day, thousands of migrants from India’s rural hinterlands are arriving in the city. By 2050, the UN expects it to be the world’s second largest city, with 36 million people.

Already today, Delhi is stretching well beyond its limits. Millions of inhabitants live life at the very edge of society, in slums, in vast shanti towns, or on the streets. There are acute water shortages. The air is amongst the most polluted anywhere, reaching levels way beyond even the scale for measuring health impact proposed by the World Health Organisation. Traffic is highly congested. New infrastructure and housing construction projects take long to complete and execution quality is often poor.

How could an industrial construction process help? For one, it could make large numbers of houses available quickly and at low cost. However, at a more strategic level, it could help make the urban stock “smarter” and more resource efficient. Technologies to harvest water or save energy, to generate electricity or to connect with the city (grid, mobility) would be cheaper and could be much better designed and integrated. What is more: it might actually get done, at scale and speed.

Take solar as an example: integrating solar PV systems into the design and construction of houses in a factory process could reduce the cost of residential solar by at least 50%, according to TFE Consulting estimates. The panels could be financed together with the house or they could be financed in an aggregated manner by a third party. Power could be consumed in the house, sold to the neighbourhood through a microgrid, or fed into the overall power grid. A much higher share of residential solar could help reduce air pollution (by reducing diesel usage), increase the availability of electricity, avoid substantial grid losses, and even provide an additional source of income for the community living under the roof.

At the same time, building large settlements would offer an ideal market opportunity for the industrial, modular construction process. They offer the scale needed to reduce initial transaction costs. These include, for example, the costs of location specific designs and the resulting adjustment of the manufacturing process. In addition, a large project can be used to guarantee the best possible utilisation of a factory (in order to make full use of the cost advantages).

Population, resource and climate pressures demand that we build better cities than we did in the past 50 years. However, currently, in many countries, the cities we build are actually much worse. Bringing a still mostly pre-modern construction industry into the industrial and then digital age can be a key part of the solution.