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Builders vie for leadership in modular construction

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Korea's highest modular apartment building in Yongin, Gyeonggi Province, built by Hyundai Engineering, is seen in this June file photo. Courtesy of Hyundai Engineering

Off-site construction to be used for NEOM, Ukraine
By Park Jae-hyuk

Competition is heating up among major Korean builders to gain the upper hand in the market for modular construction, which involves producing standardized components of a structure in an off-site factory and assemblage on-site.

The off-site construction method is considered beneficial, as it can reduce construction periods, industrial accidents and carbon emissions. It has also drawn attention recently, because of its potential use in Korean builders' participation in projects to build the NEOM smart city in Saudi Arabia and in the reconstruction of war-torn Ukraine.

According to the Ministry of Land, Infrastructure and Transport, the size of the domestic modular construction market reached 175.7 billion won ($130 million) in 2022, up from 26.8 billion won in 2020. The market size is expected to be 250 billion won this year and surpass 2 trillion won in 2030.

However, the proportion of modular buildings has remained small in the Korean construction industry, due to high cost, which has been mentioned as the main problem of the method, since POSCO Group built the nation's first modular building in 2003.

Given that builders need to invest large amounts in production facilities and create stable demand, it has been difficult for companies to profit from modular construction without achieving economies of scale through mass production.

"Creation of stable demand is prerequisite for a sustainable modular construction industry, so overseas expansion is necessary," said Kim Hwa-rang, a researcher at the Construction & Economy Research Institute of Korea.

As the researcher advised, Samsung C&T signed a memorandum of understanding in January with the Public Investment Fund of Saudi Arabia to build and run a facility to produce modular parts there. These could eventually supply components to NEOM.

In August, the builder also showcased its modular construction technologies that can be applied to apartments in the future.

"The Saudi Arabian facility is expected to be used not only for the NEOM project, but also for construction of houses in Saudi Arabia," a Samsung C&T official said.

A Smart Cottage is on display during the IFA 2023 in Berlin. Courtesy of GS E&C

GS E&C is also engaged in the competition, through the acquisition of a Polish prefabricated timber-frame house builder Danwood in 2020 and the establishment of XiGeist, a subsidiary specializing in prefabricated houses.

When the NEOM Roadshow was held in Seoul in July, GS E&C President Huh Yoon-hong expressed the company's interest in participating in NEOM and Ukraine's reconstruction by utilizing modular construction technologies. During the IFA 2023 in Berlin in September, the builder also displayed a prefabricated home, Smart Cottage, in collaboration with LG Electronics.

"We are doing the modular home business in Poland, which is adjacent to Ukraine," Huh said.

Kolon Global signed a memorandum of understanding in September with SY, a domestic maker of external panels for buildings, to utilize modular construction and other off-site construction methods in Ukraine's reconstruction project.

"The cooperation is meaningful as we will be able to do off-site construction suitable for Ukraine's climate," a Kolon Global official said.

Land Minister Won Hee-ryong also vowed to support domestic builders to win overseas orders for modular houses, during his attendance at the ceremony in June for the completed construction of Korea's highest modular apartment building built by Hyundai Engineering.

"Modular construction is an innovative technology that can solve problems in the construction industry through prefabrication," he said at that time. "As massive construction orders involving Ukraine's reconstruction and other projects are set to be placed, builders will likely win overseas orders."

Park Jae-hyuk


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