Seoul's Hot Reconstruction and Redevelopment Contract Battle Heating Up Since Early Year

[Asia Economy Reporter Yuri Kim] The competition for prime reconstruction and redevelopment projects in Seoul has been heating up since the beginning of the year. Following the recent selection of GS Construction as the contractor for Hannam Heights reconstruction, one of the major projects in the northern part of Seoul, several key project sites in Seoul are holding site briefings in succession. In particular, with market polarization expected due to the housing market downturn, it is anticipated that competition among companies will intensify around the Gangnam area projects, which boast excellent locations, in major redevelopment and reconstruction projects.

According to the maintenance industry on the 23rd, six companies including Samsung C&T, Hyundai Engineering & Construction, Daelim Industrial, Lotte Construction, HDC Hyundai Development Company, and Hoban Construction participated in the site briefing held the day before for the selection of the reconstruction contractor for Sinbanpo 15th Apartment in Banpo-dong, Seoul. Samsung C&T attracted attention by making an appearance for the first time in five years since the reconstruction of Seocho Mujigae Apartment in December 2015.

The Sinbanpo 15th Reconstruction Association terminated its contract with the existing contractor Daewoo Engineering & Construction last month due to conflicts over increased construction costs. Subsequently, on the 14th, it announced a bidding notice for contractor selection and held a site briefing the day before yesterday, distributing bidding guidelines containing bidding conditions and future schedules to participating companies. The bidding will take place on March 9. Only companies that attended the site briefing are eligible to bid. The Sinbanpo 15th Association plans to reconstruct the current 180 households into 641 households across 6 buildings, ranging from 4 basement floors to 35 above-ground floors. The construction cost proposed by the association is around 240 billion KRW. It faces Banpo Acro River Park, known as the most expensive apartment in Korea with prices exceeding 100 million KRW per 3.3㎡.

More major reconstruction and redevelopment bidding competitions are scheduled to follow. The industry is particularly focused on Banpo Jugong 1st Complex 3rd District in Seocho-gu, considered the largest project in Gangnam this year, and Hannam 3rd District in Yongsan-gu, with a total project cost reaching 7 trillion KRW. Banpo Jugong 1st Complex 3rd District, with a construction cost of 808.7 billion KRW, terminated its contract with the existing contractor HDC Hyundai Development Company on the 24th of last month and decided to select a new contractor. Seven companies including Samsung C&T, Hyundai Engineering & Construction, Daelim Industrial, GS Construction, Daewoo Engineering & Construction, Hyundai Engineering, and Lotte Construction have already expressed their intention to participate in the bidding through meetings held earlier this year. The association plans to hold a site briefing around February 10 after completing related procedures such as board meetings.

Hannam 3rd District, with a construction cost of 1.8 trillion KRW, is also preparing to select a contractor in May. A site briefing is planned around the 13th of next month. Hyundai Engineering & Construction, Daelim Industrial, and GS Construction participated in the bidding for Hannam 3rd District at the end of last year, but the contractor selection was canceled due to government regulations aimed at curbing overheated bidding, and a re-bid is being prepared. Recently, the prosecution decided not to indict three construction companies that were booked on charges including violations of the Urban and Residential Environment Improvement Act during the bidding process for the Hannam 3rd District redevelopment contractor selection.