2013-08-18 13:22:47 - Fast Market Research recommends "Construction in South Korea - Key Trends and Opportunities to 2017" from Timetric, now available
The South Korean construction industry recorded a review-period (2008-2012) CAGR of 1.58%. The housing market deflated in 2008 as interest rates began to rise and banks tightened their lending conditions. This was a key reason for a decline in domestic demand, and contributed to the country's economic deceleration from an average of 5.2% during 2000-2007 to 2.3% in 2008, and just 0.3% in 2009. Infrastructure investments will support the construction industry, which is struggling due to poor property sales and tightening credit conditions. Investments related to the 2018 Winter Olympic Games are also expected to drive industry growth. Timetric expects the South Korean construction industry to record a forecast-period (2012-2017) CAGR of 3.07%.
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* South Korea's real GDP growth moderated from 3.7% in 2011 to 2.0% in 2012 owing to subdued domestic and external demand. Exports, which account for over half of the economy's GDP, moderated from 9.1% in 2011 to 4.2% in 2012 due to weakening demand from key trading partners. Investments contracted by 1.7% in 2012 - worse than the 1.0% decline reported in 2011 - led by poor performance in both facilities and construction investment.
* South Korea's real GDP is expected to grow by 2.5% in 2013 and 3.6% in 2014, led by gradual improvement in global economic output. The South Korean economy is expected to recover and grow by an average of 4.0% over the forecast period.
* South Korea's construction industry underwent a period of weak performance due to the financial crisis. Output declined by 1.6% in 2009 and recorded only a marginal growth of 0.9% in 2010. Korean construction companies are struggling due to weak property sales on account of tightening credit conditions.
* Office building construction projects that were delayed following the financial crisis resumed development in 2011. A number of these projects have been completed or are nearing completion, and the market is therefore oversupplied. In the fourth quarter of 2012, leasing demand for Grade A office buildings in Seoul recorded a noticeable decline. Considering the oversupply and the moderate growth forecast, the market will continue to be tenant-driven with developers competing on price to have their properties leased.
* Retail building development is focused on the construction of outlets, as the format is considered better value in the current economic conditions. Fashion stores continue to be primary occupiers of retail leasing space in Korea and much of the nation's shopping mall and outlet construction is taking place in satellite towns.
* A weakened Korean won, and an earthquake and a tsunami in Japan provided South Korea's exports and manufacturing industries with a boost during 2010-2011. The industrial production index increased by 16.7% in 2010 and 7% in 2011, but slowed to 1.8% in 2012 as a weakening Japanese yen increased demand for Japanese export products and the debt crisis across Europe affected demand.
* The country's largest companies are in the midst of a wage dispute against labor unions. Lower labor costs compared with the US and Europe provide Korean companies with a distinct competitive advantage. The result of these negotiations could have significant implications for South Korea's industrial competitiveness.
* As part of its preparations for the 2018 Winter Olympic Games, the government has announced an investment of KRW4.1 trillion (US$3.7 billion) for a train line connecting the central city of Wonju to the host cities of Pyeongchang and Gangneung.
* South Korea has shut down two nuclear reactors and delayed the start of another after discovering that facilities were using components whose quality certificates were faked. Another seven reactors are out of service for routine maintenance work. Corruption allegations, the announced review of all 23 reactors and stricter checks on future construction will decelerate the growth of the energy infrastructure category.
* A property slump and non-performing loans led to a situation of residential property oversupply and declining demand. The government has announced various measures to support the construction industry, such as tax incentives, financial support for housing and real estate developers, increasing the mortgage fund, and tax breaks for first-time buyers.
This report provides a comprehensive analysis of the construction industry in South Korea:
* Historical (2008-2012) and forecast (2013-2017) valuations of the construction market in South Korea using the construction output and value-add methods
* Segmentation by sector (commercial, industrial, infrastructure, institutional and residential) and by project type
* Breakdown of values within each project type, by type of activity (new construction, repair and maintenance, refurbishment and demolition) and by type of cost (materials, equipment and services)
* Analysis of key construction industry issues, including regulation, cost management, funding and pricing
* Assessment of the competitive environment using Porter's Five Forces
* Detailed profiles of the leading construction companies in South Korea
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Timetric is an independent economic and business research firm providing critical intelligence on emerging economies and key global industries. They provide detailed economic and sector intelligence, business insights and authoritative, independent commentary. View more research from Timetric at www.fastmr.com/catalog/publishers.aspx?pubid=1037
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