[Changing Dynamics in Overseas Construction①] Korea's Construction Industry Pursues $4 Billion in U.S. Investments by Proactively Sourcing International Projects

First Government-Led Drive to Win Overseas Projects
U.S. Proposes Over 10 Long-Term Investment-Development Projects
"Financial Sourcing Will Decide Success... Comprehensive Capabilities Essential"

Domestic construction companies in South Korea are once again turning their attention to overseas markets. As the downturn in the construction sector, including housing, has persisted for several years, companies are seeking new opportunities abroad. However, their approach has evolved. Instead of simply acting as contractors who secure and build projects, they are shifting toward investment-oriented development models that encompass financial sourcing, equity investment, and operational management. In particular, since the beginning of this year, government-led initiatives to win overseas projects have been tried for the first time, and the construction industry is moving quickly to establish a stable, high value-added profit structure centered around global markets.

An apartment construction site in Seoul city. Photo by Yonhap News Agency

According to the industry on September 9, construction companies are carefully considering participation in the project opportunities recently released by the Ministry of Land, Infrastructure and Transport at the 'Introduction to U.S. Government Construction Projects' briefing. At this event, the ministry introduced five projects, including a potassium chloride plant in Michigan (worth 1.9 billion dollars) and an ammonia production facility in Washington State (worth 1.5 billion dollars). In addition, new projects totaling 4 billion dollars in Texas, California, Illinois, and other states were unveiled. The government has reportedly received proposals for around 10 projects through high-level discussions with the U.S. government.

The main reason construction companies are interested in these projects is that all of them are long-term, investment-oriented development (PPP) models. Unlike the previous way of directly bidding and competing for projects at overseas locations, the government now identifies business opportunities and connects them with companies. An official from the Ministry of Land, Infrastructure and Transport commented, "It is a new structure for the government to discover promising projects abroad and introduce them to domestic companies." An industry official who attended the event added, "We are currently pursuing U.S. projects at the company level," and said, "Given the strong policy support, now is considered the best opportunity."

Collaborative models between private firms are also emerging. In June, Daewoo Engineering & Construction re-entered the North American real estate development market for the first time in 20 years by launching a residential development project in Palisades Park, Bergen County, New Jersey. To overcome the limitations of simple construction contracting, the company also considered local project sites in partnership with the Korean developer HM Group.

The industry’s shifting focus overseas is primarily driven by the need for structural transformation. According to McKinsey Global Institute, productivity growth in the construction sector is significantly lower than in ICT or manufacturing, and the level of digital adoption remains among the lowest across industries. This is due to a labor-intensive, site-dependent production system and a business structure dominated by suppliers. While the operating margin for traditional contracting is around 2–3%, investment-oriented development projects present opportunities for creating high added value with returns of over 10%.

In addition, another strength of Korean construction companies lies in their ability to offer customized packages of expertise in fields favored by project awarding countries—such as ICT, mobility, defense, and energy—where Korea has a competitive advantage. The public-private 'Overseas Construction Project Support Team,' established by the Ministry of Land, Infrastructure and Transport, aims to achieve annual overseas orders of 50 billion dollars and rank as the world's fourth-largest construction powerhouse by 2027.

Han Manhee, Chairman of the International Contractors Association of Korea, explained, "In the past, overseas construction grew primarily around engineering, procurement, and construction (EPC), but as price competition intensifies and profitability becomes difficult, it is increasingly challenging to expect continuous growth with simple contracting alone." He added, "Globally, the market is rapidly restructuring into high value-added businesses that span project planning, finance, investment, and operation, with the focus expanding from plants to advanced infrastructure such as nuclear power plants, data centers, and semiconductors." He emphasized, "In investment-oriented development, competitiveness in financial sourcing determines success. It is important to strengthen financial capabilities and develop comprehensive business development expertise covering international contracts, claims management, local laws, taxes, labor, as well as operation and management."

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