South Korea's 1.35 Million New Homes Plan: A Game Changer for Real Estate and Construction Sectors

South Korea's government has unveiled an ambitious plan to construct 1.35 million new housing units by 2030, a move designed to stabilize the overheated property market and address a housing affordability crisis that has plagued young families and low-income households. This initiative, the largest of its kind in recent history, represents a seismic shift in the country's approach to urban development. For investors, the plan offers a unique opportunity to capitalize on near-term construction demand while positioning for long-term gains in a sector poised for structural transformation.

A Supply-Side Revolution: How the Plan Works

The 1.35 million housing plan is not merely a numbers game. It is a strategic overhaul of South Korea's housing supply chain. The government has shifted from a model of selling public land to private developers to one of direct development via state-run agencies like the Korea Land & Housing Corporation (LH). This change accelerates timelines—reducing the average redevelopment project duration from 13 years to 5—and ensures that construction starts, rather than permits, define progress.

The plan prioritizes Seoul and its surrounding metropolitan area, where housing prices have surged by 31 weeks of consecutive growth as of September 2024. By converting unused government land, shuttered schools, and long-vacant office buildings into residential units, the initiative aims to decongest the capital while expanding affordable housing. Additionally, easing floor area ratio limits and removing sunset clauses for public urban projects will unlock an additional 50,000 homes.

Construction Sector: A Goldmine for Builders

The construction industry stands to benefit most from this plan. The South Korean construction market, valued at $179.41 billion in 2025, is projected to grow at a 3.45% CAGR through 2030. With 270,000 homes to be built annually over the next five years, demand for construction services is set to surge.

Samsung C&T, Hyundai E&C, and GS E&C—the sector's dominant players—have already begun to show signs of recovery. Hyundai E&C, for instance, reported a 47.3% year-on-year increase in operating profit in Q2 2025, driven by the completion of high-margin projects. GS E&C followed with a 14.03% profit rise, while Samsung C&T faced a 10.45% decline, attributed to the completion of large-scale projects and reduced high-tech supply activities.

These firms are also leveraging technological advancements to improve efficiency. Modular construction, BIM (Building Information Modeling), and AI-driven project management are becoming standard, reducing costs and timelines. For example, GS E&C's partnership with BASF to develop modular carbon capture solutions aligns with the government's green building mandates, positioning the company to win contracts in sustainable urban projects.

Long-Term Property Value Stabilization

While the immediate focus is on construction, the plan's long-term implications for property values are equally compelling. By increasing housing supply in high-demand areas, the government aims to curb price inflation and reduce household mortgage debt, which has reached record levels.

Historically, South Korea's housing market has been prone to speculative bubbles, exacerbated by lax lending rules and foreign investment. The new plan includes stricter mortgage regulations and a dedicated investigative body to crack down on illegal practices. These measures, combined with the influx of new housing, could lead to a more balanced market.

For real estate investors, this means a shift from speculative bets to value-based investments. Affordable housing projects and mixed-use developments in Gyeonggi Province and Incheon, for instance, are likely to see sustained demand as the government promotes regional migration.

Strategic Entry Points for Investors

The key to capitalizing on this opportunity lies in identifying companies best positioned to execute the plan. Hyundai E&C's recent performance and international partnerships (e.g., its Saudi Aramco petrochemical project) suggest it is well-prepared for large-scale housing contracts. GS E&C's focus on sustainability and modular construction also aligns with government priorities.

Samsung C&T, despite its recent profit decline, remains a formidable player. Its global expertise in infrastructure and energy projects could give it an edge in winning bids for complex urban redevelopment projects. However, investors should monitor its debt levels and project pipeline for signs of recovery.

For those seeking exposure to the broader sector, ETFs tracking South Korea's construction and real estate industries could offer diversified access. Additionally, smaller firms like HanmiGlobal, which specialize in niche infrastructure projects, may present undervalued opportunities.

Risks and Considerations

No investment is without risk. The construction sector is capital-intensive, and delays in government approvals or funding shortfalls could disrupt timelines. Off-balance sheet liabilities, particularly in the commercial real estate segment, remain a concern. Investors should also watch for potential oversupply in certain regions, which could dampen property values.

Conclusion

South Korea's 1.35 million housing plan is a bold and necessary intervention in a market at a crossroads. For investors, it represents a rare confluence of near-term demand and long-term structural change. By focusing on companies with strong execution capabilities, technological innovation, and alignment with government priorities, investors can position themselves to benefit from this transformative initiative. The key is to act decisively—before the market fully prices in the scale of this plan.