Respite for builders in H1 but won’t last

The value of domestic construction orders received by local builders in the first half jumped 9.7 percent from a year ago after it saw a surge in the number of contracts from privately financed sectors.

According to a report released by the Construction Association of Korea (CAK), local builders netted 54.81 trillion won ($48.55 billion) worth of construction projects at home from January to June, up nearly 5 trillion won from the same period last year.

Private-sector building orders led the growth with contracts worth 39.58 trillion won, up 11.6 percent from last year. Public-sector projects were valued at 15.23 trillion won in the first six months of 2012.

The value of private civil engineering projects jumped 36.4 percent on-year due to rising demand for combined cycle power plants in Gyeonggi, as well as for privately funded highways and tunnels. In contrast, similar contracts from the public sector climbed just 5.2 percent.

Meanwhile, private construction projects totaled 3.8 percent more than in 2011 on the back of orders for residential housing near Sejong City, which is going to be a new administrative center, and other areas that require government offices.

The CAK said that government-financed construction projects such as railways and ports kept local builders busy, as did contracts to build a thermal power plant in Taean, South Chungcheong, a combined cycle power plant in Ulsan, and a green power plant in Samcheok, Gangwon.

Building orders from government-funded sectors edged up 1.1 percent on-year due to a paucity of interest in building non-residential buildings.

The value of domestic construction orders won by local builders in June was 13.13 trillion won, up 1.1 percent from May. The government-funded projects were worth 3.96 trillion won, while privately financed building orders were worth 9.17 trillion won, according to the CAK.

Although the statistics show local builders were powering along in the first half, they are not expected to enjoy such a respite in the rest of the year as the frozen housing market and sluggish economy take their toll.

“There were enough domestic construction orders in the first half to go around as people in the private sector wanted to build power plants and the government shored up its construction budget earlier than expected,” the CAK said in a statement. “However, the growth rate is slower than expected [and] construction orders in the second half will not keep pace.”

By Joo Kyung-don [kjoo@joongang.co.kr]