Construction permits plunge amid economic slump

SEOUL, March 9 (Yonhap) -- The amount of floor space approved for construction in
South Korea plunged by nearly half in January, reflecting a protracted slump in
the housing market amid the deepening recession and tightened credit conditions,
a government report showed Monday.
According to the report by the Ministry of Land, Transport and Maritime Affairs,
a total of 4.49 million square meters of floor space were approved for
construction in January across the nation, down 48.4 percent from the same month
a year earlier.
Permits for residential houses plunged 63.2 percent to 900,000 square meters,
marking the lowest level since January 1989. Floor space permitted for commercial
buildings declined 53.4 percent to 1.07 million square meters, while plants and
industrial facilities saw approved floor space fall 38.1 percent to 965,000
square meters.
Construction starts also declined 38.9 percent to a combined 3.64 million square
meters, according to the report.
The sharp contraction is attributed to frozen investor sentiment in the
construction sector, with small and mid-sized builders struggling to secure
credit in the face of the deepening economic downturn.
Floor-based construction permits are a main gauge of investments in the
construction sector, which accounts for around 20 percent of the nation's gross
domestic product.
The government recently intensified efforts to lure overseas investment in the
construction sector by providing tax benefits and other incentives. In February,
the Finance Ministry said that it will provide tax cuts, including capital gain
tax exemption, to those who purchase unsold apartments here.
As of the end of December, around 165,000 newly built homes remained unsold, an
all-time high according to government data.
kokobj@yna.co.kr
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