In the first quarter of this year, private construction contracts increased, centered around dwellings maintenance projects; however, due to the effects of budget cuts in social overhead capital (SOC) and delays in tenders, public construction contracts fell below 10 trillion won, resulting in a recession.
According to the 'March 2025 Construction Contract Status' report published by the Korea Construction Industry Research Institute on the 25th, the total construction contract amount for the first quarter of this year was 36.5 trillion won, which is a 6.4% decrease compared to the same period last year (39 trillion won). However, while private sector contracts amounted to 27.6 trillion won, a 5.3% increase from last year (26.2 trillion won), public sector contracts fell to 9.1 trillion won, down 29.4% from the previous year (12.9 trillion won).
In particular, public sector contracts recorded 9.1 trillion won in the third quarter of 2023 and fell below 10 trillion won for the first time in one and a half years.
In contrast, the private sector experienced growth as redevelopment, reconstruction, and urban maintenance project contracts increased actively. The top 10 construction companies recorded a contracts amount of 14.7122 trillion won for maintenance projects from January to April this year, exceeding half of last year's annual contract amount (27.8702 trillion won). Medium-sized construction companies also actively sought contracts for small-scale maintenance projects, such as light housing construction, diving into dwellings maintenance projects.
On the other hand, public sector contracts in the civil engineering institutional sector, which accounts for the largest share, plummeted by 44.6% from 9.2 trillion won last year to 5.1 trillion won. The non-housing sector also recorded a decrease of 11.5%, totaling 2.3 trillion won. This decline was attributed to reduced SOC project budgets and delayed executions. The government has reduced this year's SOC budget to 25.5 trillion won, down 3.6% from last year (26.1 trillion won).
In particular, construction companies noted that the lack of realization of construction costs has resulted in insufficient project viability for public projects. They also pointed out that while the construction costs are low, the complexity of typical civil engineering projects leads to high risks.
A representative from a major construction company stated, "While there is a lack of work due to the recent economic recession, and construction costs are rising sharply, it is unlikely that any construction companies will recklessly dive into SOC projects that require substantial expenses."
The decrease in tenders amid the early presidential election situation has also impacted the scenario. Although the government has initiated early tenders to revive the construction market, on-site reports indicate a passive attitude toward budget execution, leading to delays in public projects. According to the Public Procurement Service, only seven facility construction tenders have been executed at the request of the Korea Land and Housing Corporation (LH) last March. In April, there was even less, with only one case. Not only was there a decline in LH tenders, but overall public project tenders also decreased. The amount of public facility construction tenders to be issued by the Public Procurement Service this month is 842 billion won, a 63% decrease from the previous month (3.5132 trillion won).
A representative from a major construction company remarked, "If there were expectations that the public projects sector would expand, construction companies would be less worried; however, in the aftermath of the presidential election, we are simply waiting in uncertainty since we cannot predict the situation."
Another construction company representative stated, "The longer the market recession lasts, the more advantages public projects have over private projects in terms of stability; however, if the tendering is delayed like this, the pain of the recession will only increase further."