Although it's prime... Hangang Mansion Construction Company Likely to Fail Auction

High Bid Deposit Burden
Only GS Construction Bids, Samsung C&T Withdraws

[Asia Economy Reporter Kim Hye-min] The selection of the construction company for the Yongsan-gu Ichon-dong Hangang Mansion, considered a prime riverside reconstruction project in Seoul, is expected to fail. Although several major construction companies weighed participation in the bidding, they reportedly gave up due to the burden of the high bid deposit.

According to the maintenance industry on the 29th, the Hangang Mansion reconstruction association will close the construction company bidding at 3 p.m. today. It has been confirmed that GS Construction is the sole participant in the bidding. This is because GS Construction is the only company that paid the bid deposit, which must be submitted by the day before the bidding deadline. If there is only a single bid, the bidding will be considered failed.

Hangang Mansion, which has reached its 51st year since completion, is the oldest apartment complex in the Dongbu Ichon-dong area. It consists of a total of 660 households and is planned to be transformed into 1,441 households in a 35-story building through reconstruction. Located along the Hangang River, it has been regarded as a prime reconstruction complex in the Ichon-dong area. The planned construction cost is also large, at 622.4 billion KRW, attracting the attention of major construction companies. In fact, since the project implementation approval in September, GS Construction and Samsung C&T have actively sought to secure the construction rights.

The reason the first bidding is expected to fail appears to be due to the unprecedentedly high bid deposit. The association set the bid deposit at 100 billion KRW and required full payment in cash. So far, only the Hannam 3 District in Yongsan-gu and Galhyeon 1 District in Eunpyeong-gu have demanded bid deposits exceeding 100 billion KRW within Seoul. However, considering that the apartment construction scale in those districts is about 4,000 to 5,000 households, the bid deposit demanded by the Hangang Mansion association is considered exceptional by industry insiders. Especially since there have been cases where the deposit was forfeited to the association if the bidder was disqualified, major construction companies seem to have given up on bidding.

The association plans to hold a re-bid, but if competitive bidding does not occur even then, there is a possibility that the selection method for the construction company will be changed to a private contract through a general meeting. In this case, industry observers believe that GS Construction, the only bidder, is highly likely to win the construction rights. Meanwhile, GS Construction intends to develop the area into a large-scale ‘Xi Town’ through the Hangang Mansion project.