Two South Korean construction companies -- Daewoo Engineering and Construction Co. (Daewoo E&C) and Hanwha Engineering and Construction Corp. (Hanwha E&C) -- are expected to participate in a project to build a new city with 100,000 houses in the kingdom. If realized, this project estimated at up to $20 billion would be the biggest construction deal won by Korean construction firms overseas.

Daewoo E&C and Hanwha E&C signed a memorandum of understanding (MOU) on Thursday in Seoul to join the project that calls for building a new city. The signing ceremony was attended by South Korean Minister of Land, Infrastructure and Transport Kang Ho-in, Saudi Arabian Minister of Housing Majed bin Abdullah Al Hogail, Daewoo E&C President and CEO Park Young-sik, and Hanwha E&C President & CEO Choi Kwang-ho.

Saudi Arabia is constructing a new city called Dahyat Alfursan on a site of 38 square kilometers, 14 kilometers east of Riyadh King Khalid International Airport. The project includes the construction of urban infrastructure and 100,000 houses over the next 10 years. The entire project budget is worth $18-20 billion, and some 600,000 people will reside in the new city, according to the companies.

The two Korean constructors will form a consortium with Saudi Arabian builder Saudi Pan Kingdom Company (SAPAC), and plan to sign a definitive contract in October of this year when the new city design is scheduled to be completed.

“This project is one of the key pledges King of Saudi Arabia Salman bin Abdulaziz Al Saud made after he acceded to the throne last year, and the Saudi government will directly finance the project, meaning it is very stable in business nature,” said Daewoo E&C President Park. “With the MOU, it is very likely for us to win the project,” added Park. The company expects this project to become a bridgehead for making inroads into other big construction projects in Middle East and North African countries.

“This will be a second overseas new city construction project for us following the deal in Iraq, and we will further strengthen our leading position in new city construction markets abroad,” said Hanwha E&C President Choi.

By Kim Tae-sung and Moon Ji-woong

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