Smooth Start for Overseas Construction in the First Month of the New Year... "Efforts for Regional Diversification and Advanced Portfolio"

The overseas construction contract amount in the first month of this year surpassed 1 billion dollars. This shows resilience against the contract slump during the same period last year. Attention is focused on whether the overseas construction market can become a breakthrough amid the domestic construction industry's recession.

According to the Overseas Construction Association on the 14th, the overseas construction contract amount in January this year was $1,470.76 million, an increase of 122.5% compared to the same period last year ($660.93 million).

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The contract amount in the first month of the new year surpassed 1 billion dollars again after two years. Since overseas construction contracts first exceeded 10 billion dollars in 2005, when looking only at January results, last year's contract amount fell below 1 billion dollars for the first time in 18 years. This led to continuous sluggishness throughout the first quarter of last year.

Looking at this year's contract amount by region, the Middle East ($641.13 million, 43.6%), Europe ($312.75 million, 21.3%), and Asia ($297.38 million, 20.2%) had the largest contract scales in that order. By country, Saudi Arabia ($530.32 million, 36.1%), the United Kingdom ($309.48 million, 21.0%), and the United States ($178.71 million, 12.2%) were prominent.

The increase in contract amount in the Middle East region was largely due to SGC E-Tech Construction winning a $502.87 million (approximately 650 billion KRW) chemical plant facility expansion project from Saudi petrochemical company SEPC. Due to this project contract, the share of industrial facilities by construction type was also the highest at $780.54 million (53.1%). Among companies, SGC E-Tech Construction recorded the highest market share (44.9%) by additionally winning a $150 million chemical plant project in Malaysia as well as in Saudi Arabia.

Among the overseas construction projects contracted in the past month, investment-development type (PPP) projects were the most numerous. The contract amount was $189.81 million, accounting for 12.9% of the total. This indicates that as project sizes grow globally, the ordering method is shifting to investment-development types linked with financial procurement. Previously, simple contract-type projects represented by engineering, procurement, and construction (EPC) were the majority.

In addition, Korea Land and Housing Corporation (LH) achieved overseas territorial expansion by winning a $127.93 million project management (PM) service contract for the South Saad Al Abdullah New City project in Kuwait.

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The government expects that overseas construction can fill the gaps amid significant uncertainties in the domestic construction market, including real estate project financing (PF) risks this year. Following President Yoon Suk-yeol's goal of achieving an annual contract amount of $50 billion and entering the top four construction powers during his term, recently Deputy Prime Minister and Minister of Economy and Finance Choi Sang-mok expressed determination to open the '1 trillion dollar era' of cumulative contracts within the year.

The overseas construction contract amount has exceeded $30 billion annually for four consecutive years since 2020, raising expectations. The cumulative contract amount until last year reached $963.8 billion, bringing the achievement of $1 trillion within reach. Global market research firm IHS Markit forecasted the global construction market size this year to grow 4.4% from last year to $14.4433 trillion.

An official from the Overseas Construction Association said, "The Middle East, where improvements in the ordering environment are expected, is projected to grow at an annual rate in the 10% range, while the Latin America, North America, and Pacific construction markets, where aging infrastructure and eco-friendly project orders are expected to expand, are forecasted to grow at an annual rate in the 5% range. Our companies are also diversifying regions and pursuing advanced portfolio composition by acquiring companies in the United States, Singapore, and Poland in line with changes in the market environment."

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