Construction Industry Enters Cautious Mode, "Delaying Groundbreaking and Carefully Selecting Orders..."

Construction delayed due to legal disputes at Sinbanpo 15th Complex (Raemian Onepentas) in Seocho-gu, Seoul.

[Asia Economy Reporter Cha Wanyong] The construction industry, struggling due to the housing market downturn and rising construction costs, is showing more cautious steps than ever before. Some projects delay groundbreaking despite having obtained permits, and in bidding sites, companies are refraining from participating in projects with low profitability.

According to the Ministry of Land, Infrastructure and Transport on the 5th, the nationwide housing permit volume from January to July this year was 295,855 units, showing a 6.7% increase compared to the same period last year.

On the other hand, the scale of housing groundbreaking nationwide was 223,082 units, a 28.3% decrease compared to the same period last year, and housing completion performance also decreased by 0.6% to 214,154 units.

In other words, the number of projects that obtained building permits to construct apartments but have not started construction has increased accordingly.

In fact, redevelopment projects such as Daejo 1 District in Eunpyeong-gu, Seoul, ‘Shinbanpo 15th’ in Seocho-gu, Seoul, and Yongdu-dong 2 District in Daejeon are unable to start construction due to legal disputes over increased construction costs between the association and the contractor.

Also, the Incheon Cheongna City Tower project had completed a GMP (Guaranteed Maximum Price) contract in early July and was scheduled to start construction in August, but the Korea Land and Housing Corporation (LH) decided to hold a management review meeting to examine the appropriateness of the increased construction costs, so the construction schedule has not yet been set.

In small-scale maintenance projects, construction company participation is low, causing project progress to be sluggish. The Gwangju Bongseon-dong Daeshin Apartment street housing maintenance project and the Bucheon Goean-dong Hanareum Apartment small-scale reconstruction project in Gyeonggi Province, which held site briefings last month, are known to have low participation from construction companies, leading to re-bidding announcements or consideration of selecting contractors through negotiated contracts.

The Dong-a Apartment street housing maintenance project in Dodang-dong, Bucheon, Gyeonggi Province, held a bid last month, but only construction companies ranked outside the top 100 in construction capability evaluation participated.

An industry insider said, "Due to recent increases in construction costs, interest in small-scale maintenance projects with low profitability has decreased," adding, "This trend is expected to continue for the time being."

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