Daewoo Resumes Its Overseas Construction Business

Following a nine-year hiatus after the Asian financial crisis in 1998, Daewoo Engineering and Construction will resume its overseas construction by building a large multi-purpose apartment complex in Malaysia.

Daewoo is responsible for the entire project from developing the construction site to construction.

It was confirmed yesterday that the company is planning to construct five blocks of buildings-- three blocks of multi-purpose apartments, an office building, and a serviced residence building-- starting October on 19,743 square meters of land.

The name of the apartments will be “World Mark,” Daewoo’s construction brand, which is yet to be used overseas.

One of the apartment blocks will be 10-floor building, while the rest will be 20 floors high. The project is expected to cost a total of $150 million.

Ampang is known as a school district where 14 international schools and some 60 embassies are clustered. There is also a Koreatown with some 10,000 Koreans.

A local real estate developer owns the site. Daewoo will purchase the land to carry out the project from site development through construction.

The company intends to win project financing from Samsung Securities.

A Daewoo official said, “As we are responsible for the entire project, the project will be at least twice as profitable as the contract projects.”

The company failed in its attempt to construct a 6.61 million square meter new town in the outskirts of Hanoi, Vietnam in the late 1990s. It stopped its overseas housing business after its project in Atlanta, the U.S., in 1998.

However, the company began to look to the overseas market again as the domestic housing market slowed because of tightening real estate regulations. The Ampang project is the first step in its renewed overseas housing business push.

It is also pushing forward with apartment construction projects near Hanoi in association with Kolon Engineering and Construction and Dong Il Construction.

Meanwhile, GS Engineering and Construction is planning to build a new town with its brand “Xi” on a 3.3 million square meter land parcel in Nha Be outside of Ho Chi Minh City, signaling that overseas projects by large construction companies are gaining traction.

Kim Seon-deok, director at Construction Industry Strategy Research, said, “As it is hard to generate profit in the domestic market because of heavy regulations, large construction companies with financing ability are actively seeking projects overseas.”

bell@donga.com