Seven construction firms filed for court receivership in Q1 2025.
109 general construction companies shut down in January–February (up by 30 YoY), with total closures (including specialized firms) reaching 634.
Unsold housing inventory hit its highest level in 11 years.
Opinion
Despite ongoing asset sales and restructuring efforts, the construction sector's financial distress and liquidity crisis appear structural rather than short-term, indicating prolonged instability.
Core Sell Point
The wave of bankruptcies and severe liquidity crunch in the construction industry is exerting immediate downward pressure on stock prices. Investors should consider reducing exposure and implementing strict risk management strategies.
The Korean construction sector is facing renewed crisis concerns as mid-sized construction firms increasingly file for court receivership amid deteriorating financial conditions. With the fiscal year-end and audit report disclosures approaching, panic over insolvencies is spreading. In Q1 2025 alone, seven construction firms have filed for rehabilitation, signaling severe financial strain across the industry.
Between January and February, 109 general construction firms shut down, marking a significant increase from last year. Including specialized construction firms, the total number of business closures reached 634. The sharp rise in unsold housing units is exacerbating liquidity shortages, putting additional pressure on developers.
Even major construction firms are offloading prime assets and subsidiaries to secure liquidity. Lotte Construction is attempting to sell its headquarters property to raise KRW 1 trillion, while SK Ecoplant and GS Engineering & Construction are also considering divesting key subsidiaries. However, aggressive contract bidding during the low-interest era has now become a liability, raising concerns over further bankruptcies across the sector.
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