The prolonged recession in the construction industry and rising construction costs have led to a decrease in public project orders and an increase in the burden of maintenance projects, prompting some construction companies to invest in modular building projects. Large corporations such as Samsung Electronics and LG Electronics are also investing in this area. However, it has been pointed out that the construction costs are still higher than traditional methods, indicating that more time is needed for activation.
According to the construction industry and related sources on the 28th, the government and its affiliated organizations' research and development achievements are gaining attention from construction companies. The modular housing method involves producing basic structures and walls of buildings in advance at factories and then transporting them for assembly and installation on-site. More than 80% of the entire process occurs in the factory rather than on-site. This reduces the need for on-site labor and allows for materials and components fabricated on-site to be produced using automated and standardized factory equipment, thus ensuring consistent construction quality that previously varied depending on the skill levels of craftsmen.
Several construction companies are accelerating the development of related technologies. Hyundai Engineering and Hyundai Steel are establishing the 'H-Modular Lab' to validate and apply new construction technologies, as there have been limitations in producing modular samples and actual implementations at existing business sites.
GS Engineering and Construction established its subsidiary, Zaigaist, in 2023, specializing in the production of modular single-family dwellings using prefab (modular) construction methods. It applies the design and construction technology and interior concepts of the GS Construction apartment brand Xi.
Samsung Electronics and LG Electronics are also showing interest in the modular construction business. Recently, Samsung Electronics signed a memorandum of understanding (MOU) with Yuchang E&C, the largest modular building manufacturer in the country. LG Electronics commercialized its modular dwelling 'LG Smart Cottage' since October last year.
A representative from a large construction company noted, "The modular dwellings produced by Samsung Electronics and LG Electronics are not larger than those made by construction companies, but they have the advantage of being able to install each company's appliances and incorporate smart home systems."
However, evaluations indicate that there are still many practical limitations for modular dwellings in the country. Due to an insufficiently developed market, unit costs are high compared to traditional methods, so most projects are conducted in the form of public entities initiating orders to private enterprises. It is also pointed out that the high construction costs limit the expansion of public orders.
Currently, technological capabilities are still lacking. The tallest modular dwelling in the country is 13 stories high. The height of modular dwellings is considered an indicator of technological capability. In contrast, the United Kingdom has modular dwellings over 44 stories, and the United States similarly has modular dwellings exceeding 30 stories, widening the gap between them and South Korea. There is a shortage of specialists capable of developing super-tall modular technology.
A representative from a large construction company remarked, "Since modular dwellings are, in essence, future-oriented housing, construction companies increasingly want the market to expand, but there are still various constraints. The expansion of public orders and cost reduction are crucial."
Another construction company representative stated, "Since it is still in the early stages in the country, the market has not been activated, and various business categories have not been secured. Due to the lack of a mass production system, the unit costs are relatively high right now. Until the market is formed, various pilot projects led by the government, along with supportive policies in diverse fields, are necessary."
In fact, the Korea Land and Housing Corporation (LH) has determined that to overcome these limitations, it is necessary to develop super-tall modular technology and increase project volumes to secure economies of scale, setting a long-term goal of reducing construction time by 50% and construction costs to the level of reinforced concrete projects by 2030. In June of last year, it signed a technology development MOU with Smart Modular Forum, the Korea Iron and Steel Association, LG Electronics, and four modular manufacturing companies.
Experts noted that while there are still some limitations, it is necessary to expand the market in the long term. Lee Eun-hyung, a researcher at the Korea Construction Policy Institute, stated, "Since it is produced in factories, cost reductions fundamentally require mass production. However, there are limitations in the specifications and designs of the materials that can be produced, making it challenging to mass-produce unique designs for each building. Nonetheless, in the long term, expanding in response to the aging of construction site personnel and rising labor costs is the right direction."