Hyundai, Daewoo, Lotte Competition... Who Will Win Hannam New Town Brand Town?

Perspective view of Hannam 2 District, Yongsan-gu, Seoul [Provided by Seoul City]

Intensified Competition for Construction Rights in Hannam 2 District Redevelopment in the Second Half of the Year

Daewoo and Lotte Expected to Face Off... Calls to Check Hyundai Engineering & Construction

[Asia Economy Reporter Noh Kyung-jo] The curtain has risen on the creation of a 'brand town' in Hannam New Town, Yongsan-gu, Seoul. As Daewoo Engineering & Construction and Lotte Engineering & Construction compete for construction rights in Hannam 2 District, considered a major redevelopment project in the second half of this year, there is a strong movement to check Hyundai Engineering & Construction, which has secured nearby Hannam 3 District and the UN Command site.

According to the maintenance industry on the 9th, six major construction companies including Samsung C&T, Hyundai Engineering & Construction, GS Engineering & Construction, Daewoo Engineering & Construction, Lotte Engineering & Construction, and POSCO Engineering & Construction participated in the Hannam 2 District site briefing held on the 3rd. Among them, a two-way battle between Daewoo Engineering & Construction and Lotte Engineering & Construction, which constructed the area's most luxurious residences 'Hannam The Hill' and 'Nine One Hannam,' is strongly anticipated.

Industry insiders say it is difficult to challenge these two companies as they have invested a long time and effort in the area. A representative from a major construction company that did not attend the briefing said, "We judged that the project was not feasible," but added, "Daewoo and Lotte Engineering & Construction have not just spent one or two years on this."

Although the trend seems to be leaning, there is ongoing dilution regarding Hyundai Engineering & Construction, which has a strong presence in Hannam-dong. Hyundai Engineering & Construction has established its position by building representative Han River view apartments (including residential-commercial complexes) such as Hannam Hillstate and Hannam Hyperion in Hannam-dong in the past.

Last year, Hyundai Engineering & Construction was selected as the preferred negotiation partner for the small-scale reconstruction of Hannam Pilot Apartment. This 50-year-old apartment is planned to be transformed into 'The H Maison,' Hyundai Engineering & Construction's premium residential brand.

The most impactful project is Hannam 3 District, which Hyundai Engineering & Construction won two years ago. Adjacent to Hannam 2 District, Hyundai Engineering & Construction is investing a total project cost of 8.3 trillion KRW to build 5,816 apartment units. This is the largest redevelopment project in history. Additionally, the development of the UN Command site in the direction of Hannam 1 and 2 Districts also went to Hyundai Engineering & Construction.

Hyundai Engineering & Construction has effectively occupied both sides around Hannam 2 District. Although Hannam 2 District (115,005㎡) is about one-third the size of Hannam 3 District (386,400㎡), it is located near Itaewon Station and has a high general sale ratio (45%), making it favorable in terms of project feasibility. If Hyundai Engineering & Construction also wins this project, it will lead a massive brand town in Hannam New Town.

Industry insiders agree that if the project is deemed feasible, there is no reason for construction companies to refuse bidding despite concerns about a downturn in the real estate market. However, some voices say, "If a company takes on a project right next door, the infrastructure and various conditions will be compared, increasing the burden on the construction company," and "It is generally uncommon to participate unless the timing is sufficiently spaced."

Regarding this, another construction company representative pointed out, "There are already several places where brand towns have been established. If the neighboring union wants to improve infrastructure even by increasing construction costs, it can be negotiated," adding, "Other comments are just attempts to check Hyundai Engineering & Construction."

Meanwhile, the deadline for bidding for the construction company of Hannam 2 District is next month on the 23rd. Afterward, the union plans to hold a general meeting in early November to make the final selection of the construction company.