DL E&C-Lotte Construction Competition Overheating
District Office Strengthens Management and Supervision of Contractor Selection
Bid Invalidity Must Prevent Harm to Union Members
[Asia Economy Reporter Onyu Lim] As the competition for the reconstruction contract of detached houses in Bukgajwa 6 District, Seodaemun-gu, Seoul, shows signs of overheating, local governments have stepped in to put the brakes on. This is to prevent property damage to union members by strengthening crackdowns on illegal activities.
According to the real estate industry on the 4th, Seodaemun-gu held an emergency countermeasure meeting the day before and decided to strengthen management and supervision related to the selection of the construction company for Bukgajwa 6 District, as well as operate a regular crackdown team. Moon Seok-jin, head of Seodaemun-gu Office, said, "We will take strict measures against violations to eliminate corruption arising from construction companies' competition for contracts and to ensure that maintenance projects are carried out transparently."
The reason the district office intervened in the selection process of the reconstruction construction company is that the competition for the Bukgajwa 6 District contract is heating up. Currently, DL E&C (formerly Daelim Industrial) and Lotte Construction are participating in the bidding for this project. The controversy centers on DL E&C’s offer of interior upgrades worth about 10 million won and a 60% discount on the union members’ sale price, and Lotte Construction’s proposals to link with Lotte Department Store in Sangam-dong and install a sky community. Some raise concerns that these may fall under illegal acts as defined by current law, such as “providing money or property benefits unrelated to construction” and “excessive design changes.”
A Seodaemun-gu official explained, "If the construction company’s bid is invalidated, the project could be delayed, causing property damage to union members, so the district office has taken an active stance."
The Bukgajwa 6 District reconstruction project involves building 1,970 apartment units in 23 buildings on a 106,656㎡ area of old residential houses around Bukgajwa 1-dong 327-1. Because it is close to the city center and the construction cost alone reaches 500 billion won, competition among construction companies surrounding the project appears to have escalated. An industry insider said, "There are hardly any maintenance projects in Seoul with this level of business potential, and with the recent continuous rise in housing prices in Gangbuk, companies seem to be fighting desperately for the contract."
Meanwhile, the union plans to hold a general meeting in mid-next month to select the final construction company after two joint briefing sessions.
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