Israel's anti-missile system operates on Sunday (local time), after Iran launched drones and missiles toward Israel. Reuters-Yonhap

The intensifying military conflict between Israel and Iran has unnerved Korean construction firms, which had been seeking large-scale projects in the Middle East to overcome a recent slump in the domestic housing market, according to industry officials, Friday.

Keeping a close eye on the safety of their employees at construction sites in the Middle East, the companies are also remaining vigilant against possible setbacks in their projects there.

So far, there have been no reports of damage to their operations in the Middle East, as major Korean construction firms are not involved in projects in Israel and Iran, according to the Ministry of Land, Infrastructure and Transport, which launched an emergency response team when the Israel-Hamas war broke out last year.

A small Korean construction firm in Israel will soon leave the country, once it finishes test operations of power generation equipment it built.

However, there exists the possibility of the ongoing battle spreading to other Middle Eastern countries, such as Iraq, where Hyundai E&C, Daewoo E&C and Hanwha Corp.'s engineering and construction division have operations. Some foreign news outlets reported explosions in Syria and Iraq, after Israel struck back at Iran on Thursday (local time) in retaliation against drone and missile attacks last Saturday.

"Our sites in Iraq were unaffected, but we are closely monitoring the situation in collaboration with the Korean Embassy and the Iraqi police," said a spokesman for Hanwha Corp.'s E&C division, which resumed the construction of Bismayah New City in southeast of Baghdad earlier this year.

Hyundai E&C, which is involved in various projects in Saudi Arabia and Iraq, recently ordered its employees there to refrain from visiting crowded areas and religious facilities for their safety.

Doosan Enerbility, which has built power plants and desalinization facilities in the Middle East, also asked its employees there to stay in their residential facilities patrolled by security guards.

"We are prioritizing the safety of our employees," a Doosan Enerbility spokesman said. "Whenever tensions escalate in the Middle East, we have taken similar measures."

During an earlier phase of the military conflict, there were expectations that Middle Eastern countries might increase construction orders with Korean firms, leveraging revenues from the anticipated rise in global oil prices. The Korean won's depreciation was also considered favorable for Korean construction firms seeking to win projects in the Middle East.

However, a growing number of Korean construction firms are now concerned about potential hikes in raw material prices, because the shipment of goods could be delayed significantly if Iran blocks the Strait of Hormuz.

Data compiled by the International Contractors Association of Korea revealed that during the first quarter, 183 Korean construction firms secured $2.4 billion in combined orders from Middle Eastern countries, accounting for 44 percent of a total $5.5 billion worth of orders they won from 63 nations.