According to the Construction Association of Korea on Sunday, up to 251 builders went under in January-September, up 48 percent from last year. Even firms included in the top 100 in construction capability evaluation by the government, are endangered.

The crisis facing the construction industry has partly resulted from the record number of new apartments remaining unsold. According to the Ministry of Land, Transport and Maritime Affairs, 157,000 new apartment units remained unsold nationwide by the end of August, reaching a record high since data was first compiled in 1995. This number has more than quadrupled from 38,000 in 2003.

Difficulties facing construction firms are inevitable, since builders usually borrow from banks for purchasing land and cover construction costs first and repay their debts after selling units. To make matters worse, the ongoing economic crisis is forcing financial institutions to collect construction companies’ debts and to restrict the maturity of their lending.

The government has released a series of measures designed to rescue the ailing industry since June. However, these are ineffective, since the business outlook is gloomy and many apartment complexes were built recklessly in provincial regions where demand is particularly low. In addition, even though the government announced on Oct. 21 to spend W2 trillion (US$1=W1,295) buying new unsold apartments, funds are insufficient to purchase even 20,000 units.

(englishnews@chosun.com )