Banpo 1 District 3rd Section Bidding Battle: 'Raemian's Launch'

Samsung C&T Throws Hat in the Ring for Redevelopment Project After 5 Years
Expresses Intent to Participate by Paying 1 Billion KRW Bid Deposit on Announcement Day

[Asia Economy Reporter Lee Chun-hee] It has been confirmed that Samsung C&T has officially declared its entry into the maintenance project bidding competition for the first time in five years.

According to industry sources on the 19th, Samsung C&T paid a bid deposit of 1 billion KRW on the 17th to participate in the site briefing session for the selection of a construction company hosted by the Banpo Jugong Complex 1 District 3rd Section Reconstruction Association in Banpo-dong, Seocho-gu, and notified the association of this fact. This was on the same day the association announced the bid for selecting the construction company.

Samsung C&T also stated, "Since expressing our intention to bid last year, we have continuously participated in the association's schedule," effectively confirming their participation in the bidding. Currently, besides Samsung C&T, Hyundai Construction, Daelim Industrial, GS Construction, Daewoo Construction, Hyundai Engineering, and Lotte Construction are known to have expressed their intention to participate in the reconstruction construction company selection bid for this complex.

Samsung C&T, which promotes the 'Raemian' brand, is returning to the maintenance project bidding competition such as redevelopment and reconstruction for the first time in over five years since 2015. In addition to the 3rd Section reconstruction, Samsung C&T is also known to have participated in the site briefing session for the selection of a construction company for the Sinbanpo 15th reconstruction in Banpo-dong last month.

The last time Samsung C&T completed a maintenance project bidding competition was the reconstruction project of Mujigae Apartment in Seocho-dong in 2015. At that time, Samsung C&T lost to GS Construction at the general meeting and has not entered any bidding competition since. Even participation in the pre-bidding stage site briefing session is the first in three years. Samsung C&T participated in the site briefing session for the selection of a construction company for the Bangbae 5 District redevelopment in 2017 but did not appear in the final bid.

▲ A bird's-eye view of 'Raemian One Bailey' (Sinbanpo 3rd Complex and Gyeongnam Apartment Reconstruction), a maintenance project complex last contracted through a private contract by Samsung C&T in 2015 (Provided by Samsung C&T)

After stopping maintenance project bidding, Samsung C&T's performance declined. According to last year's performance announcement, the construction division's sales last year were 11.652 trillion KRW, down 467 billion KRW from the previous year. Operating profit also decreased by 233 billion KRW to 540 billion KRW compared to the previous year. In particular, the order backlog for building construction projects, including housing, was 13.777 trillion KRW last year, a 30% decrease compared to 19.838 trillion KRW in 2015.

There is speculation that Samsung C&T's suspension of bidding is not unrelated to the group's 'compliance management.' Samsung C&T is known to have refrained from bidding due to concerns that overheated competition during the bidding process could lead to bribery and entertainment.

In the industry, it is analyzed that the Ministry of Land, Infrastructure and Transport and the Seoul Metropolitan Government began closely monitoring maintenance project bidding following the overheating of the bidding competition for the Hannam 3 District redevelopment in Yongsan-gu. The 3rd Section association also operates a Clean Reporting Center and requires submission of a pledge to comply with promotional activity guidelines, spreading 'clean competition,' which has created an opportunity for Samsung C&T to re-enter. An industry official said, "Since conditions have been formed for Samsung C&T, which had refrained from participating to avoid involvement in illegal bidding, to step in without burden, it is highly likely that Samsung C&T will actively pursue maintenance project orders again in the future."