November 2 Bid Deadline for Construction Companies, Samsung C&T vs Hyundai Engineering & Construction Likely Showdown
No Overheated Promotion Seen Due to Bylaw Prohibiting Construction Companies from Using OS
[Asia Economy Reporter Cha Wanyong] On the 19th, I visited the Ulsan Metropolitan City Jung-gu B04 redevelopment zone (around 190-4, Gyodong, Jung-gu). It is a typical old downtown scene densely packed with old residential houses. This area is about to undergo a complete transformation. It is planned to be transformed into a large-scale apartment complex with 55 buildings of 29 stories high, totaling 4,080 households (including 206 rental units).
Although the deadline for the construction company bid is only 10 days away (as of the 23rd), the atmosphere is very calm. Unlike other redevelopment sites, there is no overheated promotional battle. Nevertheless, tension lingers. The promotional banners of Samsung C&T and Hyundai Engineering & Construction, placed side by side in various locations, add to the tension. It feels as if a "Game of Thrones" is being played here over who is the true number one construction company.
According to the Ulsan B04 Redevelopment Association and the urban maintenance industry on the 23rd, Samsung C&T and Hyundai Engineering & Construction are expected to participate in the construction company bidding scheduled for November 2. Both Samsung C&T and Hyundai Engineering & Construction, ranked first and second in construction capability evaluation, show considerable determination, creating an atmosphere where other construction companies dare not participate.
Samsung C&T, which has held the number one position in construction capability evaluation for nine consecutive years since 2014, is emphasizing specialized designs along with its highly preferred Raemian brand, while Hyundai Engineering & Construction plans to propose ‘The H’, Ulsan’s first premium residential brand.
If the head-to-head match between the two companies materializes, it will be the first time in 15 years since the 2007 reconstruction bidding battle in Jeonggeum Village, Dongjak-gu, Seoul. At that time, DL E&C, Daewoo Engineering & Construction, and others competed, and Hyundai Engineering & Construction was selected as the construction company.
The Ulsan B04 redevelopment project involves redeveloping the area around 190-4, Gyodong, Jung-gu, constructing 55 buildings of 29 stories above ground and 4 stories underground, totaling 4,080 households (including 206 rental units). The expected project cost exceeds 2 trillion KRW, with an estimated construction cost of 1.2 trillion KRW, making it the largest redevelopment project in the region. The project is highly regarded for its profitability, with 2,946 units available for general sale excluding 1,134 units allocated to association members.
Previously, Lotte Engineering & Construction and GS Engineering & Construction were the contractors, but conflicts arose with the association over construction cost negotiations and the use of premium housing brands. Eventually, in June, the association terminated the contract and decided to select a new construction company.
Although there are only 10 days left until the bid deadline, the atmosphere remains very calm. No overheated promotional battles are visible. This is because the Ulsan B04 association has prohibited the use of external promotional personnel (outsourcing) for bidding construction companies by its articles of association. The Ulsan B04 association has established a rule stating, "If a third party visits an association member's home under the pretext of general meeting promotion to solicit voting rights, such voting rights shall be invalid." However, to ensure members' minimum right to know, only real estate visit promotions are allowed.
Samsung C&T and Hyundai Engineering & Construction's contract promotion banners hung at the Ulsan Jung-gu B04 redevelopment site. [Photo by Jung-gu B-04 Redevelopment Association]
It is also difficult to gauge the sentiment of the association members. Samsung C&T and Hyundai Engineering & Construction are evenly matched. Given Ulsan’s regional characteristics, Hyundai Engineering & Construction leads in brand recognition for companies and apartments, while Samsung C&T appears to have the upper hand in eagerness.
Hyundai Engineering & Construction is confident, boasting the advantage of being in the front yard of the Hyundai Group and possessing the best capabilities in urban maintenance projects. In fact, Hyundai Engineering & Construction has made new history in the domestic urban maintenance sector by surpassing 8 trillion KRW in contract amounts this year.
On the other hand, Samsung C&T has recorded a total contract amount of 817.2 billion KRW in urban maintenance projects this year. It is the only one among the top 10 construction companies that has not exceeded 1 trillion KRW. Therefore, winning this project is essential to meet this year’s performance targets.
Jisoo Hyung, head of the Jung-gu B04 redevelopment association office, expressed considerable enthusiasm upon hearing the news of Samsung C&T and Hyundai Engineering & Construction’s participation in the bidding, showing pride and a sense of responsibility for the project.
Head Ji said, “The most important core in selecting a construction company is how well they can carry out the project,” adding, “Both Samsung C&T and Hyundai Engineering & Construction have the capital and technical skills, so expectations are high. I hope the best apartment complex will be created with luxurious designs never seen before in Ulsan.”
He continued, “Since it has taken a long time to get to this point, we will continue transparent and systematic association management to ensure the project proceeds in the right direction. After the bid deadline, we will properly carry out administrative procedures so that the construction company can be selected by the end of this year or early next year.”
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