Korean modular builders are positioning for global expansion

Exporting manufactured elements and systems sits at the very core of many advanced economies, and modular construction sits very comfortably within that export opportunity.

Competition is heating up among major Korean builders to gain the upper hand in the market for modular construction, primarily as a consequence of Korean builders’ participation in projects to build NEOM in Saudi Arabia.

According to the Korean Ministry of Land, Infrastructure and Transport, the size of the domestic modular construction market reached 175.7 billion won (AUD $206 million) in 2022, up from 26.8 billion won in 2020. The market size is expected to be 250 billion won this year and surpass 2 trillion won in 2030.

However, the proportion of modular buildings has remained small in the Korean construction industry due to their high cost.

Given that builders need to invest large amounts in production facilities and create stable demand, it has been difficult for companies to profit from modular construction without achieving economies of scale through mass production.

“Creation of stable demand is a prerequisite for a sustainable modular construction industry, so overseas expansion is necessary,” said Kim Hwa-rang, a researcher at the Construction & Economy Research Institute of Korea.

Overseas expansion is the key to modular building growth for Korea.

Samsung C&T signed a memorandum of understanding in January with the Public Investment Fund of Saudi Arabia to build and run a facility to produce modular elements there. These could eventually supply components to NEOM.

Read Built Offsite article about Samsung C&T’s deal HERE.

In August, the builder also showcased its modular construction technologies that can be applied to apartments in the future.

“The Saudi Arabian facility is expected to be used not only for the NEOM project, but also for construction of houses in Saudi Arabia,” a Samsung C&T official said.

GS E&C is also engaged in the competition, through the acquisition of a Polish prefabricated timber-frame house builder Danwood in 2020 and the establishment of XiGeist, a subsidiary specialising in prefabricated houses.

Read about GS E&C’s XiGeist purchase HERE.

See one of XiGeist’s ‘sample houses’.

When the NEOM Roadshow was held in Seoul in July, GS E&C President Huh Yoon-hong expressed the company’s interest in participating in NEOM and Ukraine’s reconstruction by utilising modular construction technologies.

During the IFA 2023 in Berlin in September, the builder also displayed a prefabricated home, Smart Cottage, in collaboration with LG Electronics.

Read about LG Electronic’s modular smart cottage HERE.

Land Minister Won Hee-ryong also vowed to support domestic builders to win overseas orders for modular houses, during his attendance at the ceremony in June for the completed construction of Korea’s highest modular apartment building built by Hyundai Engineering.

“Modular construction is an innovative technology that can solve problems in the construction industry through prefabrication,” he said at that time. “As massive construction orders involving Ukraine’s reconstruction and other projects are set to be placed, builders will likely win overseas orders.”