ITA CODE: TBD

Overview

The Korean construction related industry, including public and private infrastructure and civil engineering services, recorded a growth of 9.2 percent in 2021. The industry generated revenue estimated at $185 billion (KRW212 trillion), and some experts including the Construction Association of Korea (CAK) predicts that the number of strong construction orders will continue to flow until next year and stimulate the post-COVID19 economy. According to the government record, it is the first time in history that the Korean construction market exceed $185 billion (KRW212 trillion).

Source: Construction Association of Korea (CAK) and International Contractors Association of Korea (ICAK)

Korea’s construction industry has been an important local and export industry. It remains as a key economic driver and a critical source of foreign currency and invisible-export earnings. Korea’s construction business overseas is as equally important to its local construction industry and is a vital part of the economy primarily led by large conglomerates, “chaebol” companies. Since Korea began its industrial expansion in the mid-1960s, Korea’s cumulative value of construction contracts from overseas exceeded $910 billion mainly attributed to the construction boom in the Middle East and Asia Pacific. Approximately 14 percent of Korean construction firms’ total revenue in 2021 was generated from services overseas. Korea continues to put heavy emphasis on increasing revenues from overseas projects. Thus far, Korean builders have mostly participated in simple outsourcing projects. However, more and more project owners have diverted from giving simple outsourcing contracts to require co-financing and investment arrangements.

In spite of the COVID-19 crisis, domestic construction orders are expected to achieve the highest performance ever, with the trend of volume fluctuations due to the enforcement of the strictest pre-sale price limit system for private residential lands, growth of provincial real estate developments outside Seoul and low interest rates. Korea’s local construction market size was increased mainly due to the significant growth in private residential constructions. In 2021. the cumulative private construction order amount was $136.2 billion, a 9.9 percent increase compared to 2020. The cumulative construction orders from the public sector amounted to $48.9 billion, a 10.8 percent increase in 2021 compared to 2020. 

Source: Construction Association of Korea (CAK) and International Contractors Association of Korea (ICAK)

Best Prospects

The U.S. is considered a global leader in engineering, procurement, and construction services, project financing and exporters of building information modeling solutions. Companies with price-competitive technologies and services should have the potential to successfully penetrate the market in the following areas:

• Project financing.
• Building Information Modeling (BIM) software.
• Opportunities

Although the Korean construction industry has been monopolized by large Korean conglomerates, “chaebol” companies, these companies also actively partner with international companies for engineering, procurement, and construction EPC projects overseas. Also, many large Korean EPC contractors and SME builders are actively trying to strengthen their financing capacity to provide funding for project owners overseas, there seems to be ample opportunities in project financing market. To identify consortium and partnership opportunities, U.S. firms should partner with a qualified Korean firm which maintains existing sales networks to serve end-users, and which are fully aware of the regulatory changes that drive the market. Also, developing and maintaining an ongoing relationship with these firms is an effective way for U.S. firms to tap into the market. The relationship a firm is engaged in, combined with the relationships of its consortium partners, can build an important and vast business network across markets and national boundaries.  This network can help a firm connect to potential customers. Although many projects get awarded through competitive or prequalification processes, some opportunities are provided directly through clients with a high preference for contracting with either U.S. or Korean contractors. Therefore, establishing close contacts and maintaining a vast network of industry leaders, academics who have project knowledge and commonly involved in the decision-making procurement process, and associations that have knowledge of the global construction market is very important. Regarding BIM, the Korean construction industry has shown a passive attitude toward smart construction for a long time. However, it was inevitable for the industry to fall behind in competition against the leading foreign construction companies with skills in applying BIM technologies into their projects. The Korean Ministry of Land, Infrastructure and Transport (MOLIT) is pursuing policies with the goal of fully applying BIM design to the entire construction industry including civil engineering and architecture services by 2025. As Korea engineering firms make efforts to actively utilize BIM, the demand for leading BIM software solutions is expected to rise.

Resources

Industry Conferences and Events

• Global Infrastructure Cooperation Conference.

Key Contacts

• Construction Association of Korea (CAK).
• International Contractors Association of Korea (ICAK).
• Ministry of Land, Infrastructure, and Transport (MOLIT).
• Korea Agency for Infrastructure Technology Advancement (KAIA).

Local Contact

U.S. Commercial Service Korea   
U.S. Embassy Seoul
188 Sejong-daero, Jongro-gu
Seoul 03141, Korea
Tel: 82-2-397-4535
office.seoul@trade.gov

https://www.trade.gov/south-korea