Korean builders are expecting to face liquidity shortfalls this year as they grapple with a worsening property market, which largely stems from the overall downturn in Asia's fourth-largest economy, a poll showed Tuesday.
According to the survey on the country's top 450 builders by the Korea Federation of Construction Contractors (KFCC), around 70 percent said they may face a liquidity squeeze or difficulty in raising funds down the road.
Of the surveyed builders, around 74 percent said their liquidity conditions had also worsened last year due to a fall in new construction orders.
According to the KFCC, loans extended by banks to local builders accounted for 65.4 percent of their total fundraising last year, which indicates that construction firms are heavily reliant on bank loans.
Earlier this month, South Korea's financial regulator announced a set of measures to boost liquidity for faltering local construction firms. The measures focus on providing builders with a total of 8 trillion won (US$7.07 billion) in liquidity.
Local banks will also buy bad debts worth a combined 2 trillion won from builders under debt workout programs and extend a fast-track liquidity aid program by another year for firms less vulnerable to insolvency, according to the measures.
The move came as local construction firms have been suffering a worsening property market amid an economic slump. Construction investment in Korea fell 1.4 percent on-year to 38.9 trillion won in the second quarter of the year, according to the Financial Supervisory Service. (Yonhap)