Korean builders outside the top 100 hold 3% of surveyed apartment project finance, down from 44%

Korea Investors Service drew its figures from about 3,600 projects worth 50 trillion won at 51 securities firms and capital companies ^[7]. Add the two builder groups together and apartment PF in that sample came to 14.0 trillion won in the second quarter of 2024 and 16.2 trillion won in the first quarter of this year ^[3]. Those lenders grew their apartment books. The top 100 gained 7.8 trillion won and everyone else lost 5.6 trillion won ^[3]. The smaller builders' share of the pool went from about 44% to about 3% ^[4].

Housing output splits the same way. Nationwide apartment presales fell by 102,240 units between 2021 and last year, and Korea Housing Builders Association members supplied 100,000 fewer units over the same years ^[2]. Take the members out and the rest of the market went from about 128,800 units to about 126,600, a fall of 1.7% ^[1]. The two series measure different things, association supply excluding rentals against Budongsan114 apartment presales ^[2][3], so the split is approximate.

Lenders have curtailed new PF since the Legoland crisis of September 2022 ^[1], and what is left gets rationed. The Construction & Economy Research Institute of Korea counts 202.8 trillion won of PF recovered or wound down over the eight quarters to March. New loans over the same stretch came to 141.5 trillion won ^[5]. The project itself gives a lender little cover. Developers put up equity of 2% to 5% of costs, so many sites depend on credit support from the contractor ^[10]. "Before the Legoland crisis, PF loans were often extended without much in the way of guarantees, but since then even large construction firms are asked for double or triple layers of credit support," an industry official told the Seoul Economic Daily ^[11]. "Projects run by small and mid-sized builders, whose capacity to assume debt is relatively weaker, inevitably get pushed to the back of the line," the official said ^[12].

This could ease without any lender changing its rules. One route is timing. Part of the recovered sum is troubled projects being wound down ^[16], and new lending has run at roughly 70% of recoveries for eight straight quarters ^[6]; once the clean-up ends and recoveries shrink, new loans could overtake them. Smaller builders could also keep building as partners under a top-100 contractor's guarantee, in which case homes still get built even as the association's count ^[2] keeps falling. A regional recovery would do it too. It would remove the asset-quality case lenders have for steering money to Seoul-area projects ^[13].

I think the record points to lending choices more than weak demand. The lenders in the Korea Investors Service sample added apartment credit overall ^[3], and the squeeze now reaches bridge loans, the land and permit money that decides what gets built later ^[14]. The thesis fails if presales outside the association's members start falling at the national rate. That would mean demand was weak everywhere and lenders were simply following it.