"Construction Market, Continued Uncertainty in Real Estate Regulatory Policies"

[Image source=Yonhap News]

[Asia Economy Reporter Park Ji-hwan] Heungkuk Securities forecasted on the 4th that the management environment for construction companies this year will not be easy due to domestic real estate regulatory policies and the overseas low-growth trend. Accordingly, construction companies are expected to seek entry into new businesses such as LNG and renewable energy projects, and to actively enter the REITs market through REIT asset management companies (AMCs).

Seungjun Kim, a researcher at Heungkuk Securities, said, "Construction companies are seeking new businesses and new markets for external growth amid difficult management conditions," adding, "Hyundai Engineering is expanding its entry into new markets, Daewoo E&C is exploring LNG and renewable energy, and seeking new business entry such as investment development utilizing AMCs."

According to Heungkuk Securities, HDC Hyundai Development Company plans to focus on creating synergy among affiliates such as aviation/transportation/logistics infrastructure, hotels/resorts, and power/energy by utilizing Asiana Airlines. It will also concentrate on financial real estate businesses such as REITs and real estate funds for real estate development, operation, ownership, and sales.

A change in the business model is also being detected in the domestic construction market. Daewoo E&C has received final approval for the establishment of Together Investment Management and plans to soon develop and list a public REIT in Vietnam.

Researcher Seungjun Kim explained, "GS Engineering & Construction is also entering the asset management business through 'G-BESCO'," adding, "They are aiming to establish a business model equipped with development/planning and financing beyond just being a project developer." He added, "Construction companies can also secure long-term rental income through REITs, and movements toward becoming comprehensive real estate developers are accelerating."

This content was produced with the assistance of AI translation services.