This year, the total value of construction contracts in the first half increased by over 25% compared to the same period last year, but 86% of this increase was concentrated among the top 50 companies. The remaining companies saw a contract growth rate of only around 6%. Experts suggest that while large projects like semiconductor facilities are driving this growth, it is premature to view it as a sign of overall recovery in the construction industry.
According to a report by Aju Economy on September 28, the Ministry of Land, Infrastructure and Transport's statistics show that the total contract amount from January to June this year reached 154.9 trillion won, an increase of 31.5 trillion won (25.5%) from the same period last year.
The contract amount for the top 50 companies rose from 55.2 trillion won to 82.4 trillion won, accounting for 86.3% of the total increase. In contrast, contracts for other companies grew from 68.2 trillion won to 72.5 trillion won, a mere 6.3% increase.
The share of the top 50 companies in the overall contract amount also rose from 44.7% in the first half of last year to 53.2% this year. In the first quarter, their share was 50.9%, and in the second quarter, it increased to 55.3%, surpassing half for two consecutive quarters.
Narrowing down to the second quarter, the gap widens further. The total contract amount increased by 17.4 trillion won from 63.4 trillion won last year to 80.8 trillion won this year. Of this, the increase from the top 50 companies was 16.4 trillion won, representing 94.3% of the total increase.
In the second quarter, the contract amount for the top 50 companies reached 44.7 trillion won, a 58% increase compared to the same period last year. In contrast, companies ranked 51 to 100 saw an 18% decrease, while those ranked 101 to 300, 301 to 1000, and below 1001 experienced growth rates of only 3.5%, 4.7%, and 8.2%, respectively.
The Ministry of Land, Infrastructure and Transport attributed the increase in contracts in the second quarter to private semiconductor production facilities and public energy and housing projects. The contract amount for civil engineering projects surged by 98.3% due to the expansion of semiconductor production facilities.
However, the construction industry sentiment does not align with the increase in contract amounts. According to the Korea Construction Industry Institute's 'September Monthly Construction Market Trends,' the Construction Business Survey Index (CBSI) for August fell below the baseline of 100.
A representative from a mid-sized construction company stated, "Even though the total construction contract amount increased in the first half, it is primarily driven by large projects like semiconductor facilities and data centers. It is difficult to conclude that the situation has improved for construction companies focused on housing and other sectors, as only a few companies with the necessary technology, performance, and financial resources can participate in these projects."
Kim Young-deok, a senior researcher at the Korea Construction Industry Institute, noted, "While the increase in contract amounts centered on private facilities is positive, the figures are concentrated in certain areas. Ultimately, there needs to be an increase in new orders in general construction sectors like housing."
He added, "To support mid-sized and small companies facing management crises due to a lack of orders, local governments should expand their project bids, and the government needs to persuade financial institutions, which are hesitant to lend due to the construction market downturn, to open up funding channels."
* This article has been translated by AI.
Copyright ⓒ Aju Press All rights reserved.