Polarization has become a buzz word in the nation’s construction industry. Large builders are looking overseas amid the prolonged slump in the local real estate market. But small and medium-sized builders, who heavily depend on the local housing market, are being pushed further to the brink of bankruptcy.

According to the Ministry of Land, Transport and Maritime Affairs, overseas construction orders won by Korean builders in 2012 rose 9.8 percent to $64.9 billion (68.1 trillion won) from $59.1 billion in 2011. It is the second best performance in history, following $71.6 billion won in 2010. The Middle East is the nation’s largest construction market. Orders won from the region accounted 57 percent, or $36.9 billion, of the total overseas orders last year, the ministry said. The Asian market followed with 30 percent, or $19.4 billion.

“Large construction companies have been dominant in the overseas construction market. For instance, the nation’s top 10 builders, including Hyundai E&C and Samsung C&T, took about 80 percent of orders won overseas last year,” an official from the International Contractors Association of Korea said.

It is hard for small ― or even mid-scale ― builders to expand into the market, as more than half of overseas orders won by Korean firms are for plant-building projects that require a huge amount of project-financing, rather than property or housing projects.

The sales gap between large and small builders has widened. The Construction Research Economy Institute found sales of small and medium-sized builders on average fell 42.4 percent to $29 million (3.1 billion won) between 1997 and 2010. In the same period, sales of large builders on average rose 330 percent to $520.4 million (556.8 billion won).

Mid- and small- sized builders have been squeezed by a liquidity crunch since the global economic downturn in 2008. Some of them like Poongrim and Woorim went bankrupt. Market watchers forecast the number of bankruptcies to increase this year, as about 65 percent of small and medium-sized builders have to reschedule their debt payment within this year.

With the grim outlook for the domestic real estate market in 2013, the Institute urged the government to draw practical measures to support small and medium-sized builders to find a niche overseas. Construction orders from overseas are forecast to grow up to $75 billion this year, with additional construction orders expected from the Middle East, the ministry said.

“The series of bankruptcies of small and mid-sized builders will deal a blow to the local economy as those builders provide 32.7 percent of the jobs in the construction industry,” an official from the institute said.

By Seo Jee-yeon  (jyseo@heraldcorp.com)