Modular prefabricated construction has attracted global attention to meet increasing housing demands and infrastructural deficits owing to its construction speed and efficiency. Unfortunately, the benefits of such modular prefabricated structures are undermined by heavy steel utilization, which is susceptible to corrosion, and contributes to their heavy weight leading to transportation and erection problems during construction. Bioinspired lightweight sandwich CFRP composite reinforcement is investigated as an alternative to steel along with recycled concrete for sustainable prefabricated construction using a performance-based hybrid Taguchi-Response surface methodology multi-objective optimization approach. The optimized result exhibited improved mechanical properties and favourable, ductile failure mode attributed to the Bauschinger strain-reversal effects and composite actions of the bio-inspired CFRP reinforcements. Comparatively, the bioinspired sandwich composite reinforcement was found to be 0.73–4.4 times more cost-effective than steel reinforced concrete structures in terms of fracture toughness and has potential applications in lightweight prefabricated (modular) concrete structures. This study also revealed prevalence of behavioral, technical, infrastructural, market and legal barriers which hinder adoption of prefabricated construction and can be overcomed through appropriate regulatory framework, standards, centers of excellence, demonstration projects and incentives for advanced prefabricated construction. Government authorities should promote advanced prefabricated composite construction in new construction projects and future smart cities to minimize construction wastes and carbon emission problems prevalent in most cities, provide employment support to construction companies, improving safety/welfare training and encourage collaboration among construction firms to improve resilience of construction industry to on-going Covid-19 and future pandemics and associated socio-economic impacts.