Architectural and Engineering Services

An Expert's View about Building Products and Construction in South Korea

Last updated: 25 Aug 2011

Summary
Korea’s architectural and engineering service industry generated revenue estimated at USD 14.6 billion (architectural design USD 4 billion, engineering services USD 10.2 billion and interior design USD 0.4 billion) in 2009. Dependent on the growth of the construction market, Korea’s architectural service industry is an important sector comprised within its USD 89 billion construction and engineering industry. During the period of the Japanese occupation of Korea (1910-1949) and through the ravages of the Korean War (1950-1953), Korean architecture suffered and many architecturally significant monuments were destroyed. Korea evolved quickly with industrialization focusing on construction. However, the practical needs of rebuilding after the war took precedence over aesthetics. Then, the country was less concerned about restoring Korean architecture and modernizing with contemporary style with emphasis in traditions. It was only since the 1988 Olympics that the economic growth of the last two decades led the country to a reformation, leading a once-desolate-land to urbanized cities. Korea continues to evolve considerably and becomes a major hub of international business in Northeast Asia. Especially, Korea's three largest cities, Seoul, Incheon and Busan have positioned themselves to be new global centers for high-rise and sustainable aspirations competing against other major cities in the Middle East, China and India. There is a growing national interest in architectural design. If the emphasis is on developing new or renovating residential, cultural or educational spaces, Korea’s growing trend is heading towards design focused architecture.

Based on this projection, over the next few years, Korea has the potential to offer business opportunities to international players in architectural design, urban planning, sustainable design consulting service and interior design services increasing activities and challenges in its architectural and engineering (A&E) services market.

Market Demand
According to the Architecture & Urban Research Institute (AURI), in 2009 among 27 out of 35 OECD member countries, the size of Korea’s architectural service market ranked 21st. In spite of the country’s consolidated foundation in IT and advancement in engineering technology, the status of the industry has been unhappily identified as one of the nosedived industry sectors. It is due to lack of understanding, and only seeing the architectural service industry as a sub-sector of construction industry. In order to sharpen competitiveness of the construction and A&E service industry, the Korean government lifted the construction regulation in 2008 that prohibited buildings of more than 100 stories in direct response to a coordinated lobbying strategy of the construction industry and developers. The Korean government also revised the service sector related the policy, “Industrial Development Act” in 2009 and began to foster the A&E industry as a part of knowledge-intensive service industry. These changes in the law were part of a broader government policy to revitalize the construction industry and promote investment. As a result, several projects are actively being formalized. These projects include what will be some of the tallest building structures in Asia.

Data from Statistics Korea shows that among 9,787 architectural firms in Korea, the top 50 architectural firms account for about 30 percent of the country’s architecture design revenue. Further, with 10,590 registered architects and most architectural firms having less than 50 employees per firm excluding the top 50 firms, Korea’s architectural and engineering service industry is developed by large architectural firms and small independent firms are engaging the local communities. However, despite the fact that large Korean architectural service firms monopolize the industry, Korea also relies on international companies when it comes to servicing schematic designs and working drawing works of supertall building structures, mixed-used business complexes, and high-end private residential buildings. Foreign architects participating in Korea's architectural services market did not start yesterday. Foreign architects involved in projects in Korea have a history dating back to the early 1980s. Kyobo building located in Gwanghwamun and 63 Building in Yeoido in Seoul were one of the earliest buildings that were designed by foreign architectural design firms. As the market expanded, many famous foreign A&E service firms have entered into the Korean market. Several foreign firms such as Nikken Sekkei, Yves Lion, Jerde Partnership, Cuningham and PDI have either opened liaison/branch office or joint venture in Korea. Others such as MVRDV, SOM, EDAW, HOK, KPF, NBBJ and De Stefano & Partners have done their businesses without establishing a presence.
Demand for A&E service is also determined by the growth of government and private investment for construction. According to the Bank of Korea and the Statistics Korea, Korea spent approximately USD 153.6 billion in construction investment in 2009. They forecast Korea’s GDP to have 5.9 percent growth in 2011 compared to 6 percent growth in 2010 due to the nation’s slowing exports and reductions in the construction investment.

Best Prospects
Design and engineering service for
• supertall building structures
• large city landmarks and mixed-used business complexes
• sustainable building designs and consulting
• district/city master planning
• high-end private residential housings
• sports arenas and multiuse structures appropriate for 2018 Winter Olympics

Read the full market research report


Posted: 24 August 2011, last updated 25 August 2011

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