The trend of construction companies relocating their headquarters is diverging. Jungheung Construction and Jungheung Tokken have moved to Seoul amid a slump in the regional housing market, while major construction firms are moving out of the city to enhance cost efficiency and link with development projects.
According to the construction industry on July 8, Jungheung Construction and Jungheung Tokken, which grew based in Gwangju, opened their Seoul office in Dangsan-dong, Yeongdeungpo-gu, in June and have begun full operations. About 120 employees work at the Seoul office, while only essential personnel for public relations and customer service remain at the Gwangju headquarters.
This move is seen as a strategic decision to shift the business focus from a weakened regional market to Seoul and the metropolitan area, aiming to secure new growth engines through urban renewal and public projects.
A Jungheung Construction official stated, "As the regional housing market slump has prolonged, we opened the Seoul office to seek new business opportunities in Seoul and the metropolitan area. We are also considering various collaborations, including urban renewal projects and joint ventures with Daewoo Engineering & Construction."
Jungheung Tokken is similarly strengthening its focus on the metropolitan area. A company representative noted, "Due to the prolonged slump in the regional housing market and a decrease in public land supply, it has become challenging to carry out our own projects, prompting us to enhance our business organization centered on the metropolitan area. We plan to expand urban renewal projects and public bidding initiatives while collaborating with Daewoo Engineering & Construction to create synergies."
Jungheung's move to Seoul is not an isolated case. Major construction firms based in Honam, such as Hoban Construction, Umi Construction, and Kumho Construction, have already relocated their headquarters to Seoul, while Jeil Construction maintains its Gwangju headquarters while operating a branch in Seoul.
The slump in the regional housing market is evident in various indicators. According to the Ministry of Land, Infrastructure and Transport, as of April this year, the number of unsold homes nationwide was 17,298 in the metropolitan area, compared to 47,881 in the regions, nearly three times higher. Meanwhile, new supply is increasingly concentrated in the metropolitan area.
Data provided by Real Estate 114 indicates that the share of metropolitan area housing supply rose from 45.7% in 2022 to 59.5% last year, and is expected to remain at 58.5% this year. In contrast, the supply of housing in key regions such as North Chungcheong, North Jeolla, and Daegu has decreased to less than half during the same period.
In contrast, the relocations of major construction firms have a different character. Already structured around the metropolitan area, these firms are moving out of the city center to development sites or new office buildings.
DL E&C relocated its headquarters from the D Tower in Gwanghwamun to One Grove in Magok, Gangseo-gu, last year. SK Eco Plant plans to move its headquarters and its subsidiary, SK Eco Engineering, to a complex center in Yangpyeong-dong, Yeongdeungpo-gu, next year, establishing a consolidated office. Meanwhile, IPARK Hyundai Industrial Development is set to move its Yongsan headquarters to the Gwangwoon University station development site. However, Hanwha's construction division stated there are "no plans" for a relocation to the northern station area of Seoul Station.
The relocations of these construction firms are interpreted as strategies to enhance operational efficiency and strengthen synergies with their own development projects rather than merely expanding into the metropolitan area. By establishing headquarters at development sites or creating consolidated offices, they aim to improve project management efficiency.
Lee Eun-hyung, a researcher at the Korea Construction Policy Institute, explained, "For regional construction firms, expanding into the metropolitan area is a natural business decision, as growth is limited within the local market. In contrast, major construction firms are moving out of the city center to the suburbs, considering factors such as rent, space efficiency, and connections to their own development projects."
* This article has been translated by AI.
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