The trend of construction companies relocating their headquarters is diverging. Jungheung Construction and Jungheung Tokwon have moved to Seoul amid a downturn in the regional housing market, while major construction firms are leaving the city center for cost efficiency and development opportunities.
According to the construction industry on July 8, Jungheung Construction and Jungheung Tokwon, which grew based in Gwangju, opened their Seoul office in Dangsan-dong, Yeongdeungpo-gu, in June and have begun full operations. About 120 employees work at the Seoul office, while only essential personnel for public relations and customer service remain at the Gwangju headquarters.
This move is seen as a strategic decision to shift the business focus from a weakened regional market to Seoul and the metropolitan area, aiming to secure new growth engines through urban redevelopment and public projects.
A Jungheung Construction official stated, "The prolonged slump in the regional housing market prompted us to open a Seoul office to seek new business opportunities in the capital and metropolitan area. We are also considering various collaborations, including urban redevelopment projects and joint ventures with Daewoo Engineering & Construction."
Jungheung Tokwon is similarly strengthening its focus on the metropolitan area. A company representative noted, "The downturn in the regional housing market and a decrease in public land supply have made it difficult for us to carry out our own projects, leading us to enhance our organizational structure centered on the metropolitan area. We plan to expand urban redevelopment projects and public bidding initiatives while collaborating with Daewoo Engineering & Construction to create synergies."
Jungheung's move to Seoul is not an isolated case. Major construction firms based in Honam, such as Hoban Construction, Umi Construction, and Kumho Construction, have already relocated their headquarters to Seoul, while Jeil Construction maintains its Gwangju headquarters while operating a branch in Seoul.
The downturn in the regional housing market is evident in various indicators. According to the Ministry of Land, Infrastructure and Transport, as of April this year, the number of unsold homes nationwide was 17,298 in the metropolitan area, compared to 47,881 in the regions, nearly three times as many. Meanwhile, new supply is increasingly concentrated in the metropolitan area.
Data provided by Real Estate 114 indicates that the share of metropolitan area housing supply rose from 45.7% in 2022 to 59.5% last year, and is expected to remain at 58.5% this year. In contrast, the supply in key regional areas such as North Chungcheong, North Jeolla, and Daegu has decreased to less than half during the same period.
In contrast, the relocations of major construction firms have a different character. Already structured around the metropolitan area, these firms are moving out of the city center to development sites or new office buildings.
DL E&C relocated its headquarters from the D Tower in Gwanghwamun to One Grove in Magok, Gangseo-gu, last year. SK Eco Plant plans to move its headquarters and its subsidiary, SK Eco Engineering, to a complex center in Yangpyeong-dong, Yeongdeungpo-gu, next year, establishing a consolidated office. Meanwhile, IPARK Hyundai Industrial Development is set to move its Yongsan headquarters to a development site near Gwangwoon University Station. However, Hanwha's construction division stated there are "no plans" for a relocation to the northern station area of Seoul Station.
The relocations of these construction firms are interpreted as strategies to enhance operational efficiency and strengthen synergies with their own development projects, rather than merely expanding into the metropolitan area. By establishing headquarters at development sites or creating consolidated offices, they aim to improve project management efficiency.
Lee Eun-hyung, a researcher at the Korea Construction Policy Institute, explained, "For regional construction firms, expanding into the metropolitan area is a natural business decision, as growth is limited within the local market. In contrast, major construction firms are moving out of the city center to enhance space efficiency, rental costs, and connections with their own development projects."
* This article has been translated by AI.
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