As conflicts in the Middle East drag on, higher construction costs and unstable supplies of materials are deepening management woes for small and midsize builders, spreading shock across the construction industry with a string of halted projects and closures.
According to the Ministry of Land, Infrastructure and Transport and industry officials on the 5th, the prolonged Middle East conflict for more than two months is simultaneously worsening material procurement and expense burdens at construction sites. In particular, prices for key materials needed for finishing, such as coatings and waterproofing agents, have surged, and supplies are not running smoothly, leading to more cases of work stoppages.
According to the Korea Institute of Civil Engineering and Building Technology (KICT), the construction cost index in March was 134.42, up 0.49% from the previous month and 2.52% from a year earlier. Prices of petrochemical materials jumped, including polypropylene resin (18.1%), polyester resin (13.2%), PVC resin (12.1%), asphalt (10.2%), and epoxy resin (10.1%).
Small and midsize builders, already hurt by high interest rates and an accumulation of unsold homes, are facing even greater burdens as the war drags on. Analysts say smaller firms with weaker purchasing power and negotiating leverage are inevitably more exposed to supply instability.
As management troubles pile up, closures are rising quickly. According to the Construction Industry Knowledge Information System, there were 1,088 construction business closure filings in the first quarter of this year, up 51.5% from 718 in 2021, and 85.2% of them were specialty contractors.
Large builders, by contrast, are withstanding the blow by absorbing part of the shock thanks to strong finances and business diversification. This is sharpening polarization within the industry. While order performance is shrinking for smaller firms, orders continue to grow for large companies.
The gap between the Seoul metropolitan area and the provinces is also widening. Orders in the metropolitan area rose from 87.4 trillion won in 2023 to 128.4 trillion won in 2025, while the provinces fell from 89 trillion won to 77 trillion won over the same period.
Industry officials say improvements to the public procurement structure and expanded financial support for small and midsize builders are needed. In particular, demands are growing to bolster the system, noting that, unlike manufacturing or services, construction has been relatively neglected in small and midsize business support policies.