KB Real Estate Trust Posts Construction Contractor Selection Bid Announcement
Controversial Clause Removed... Hyundai and POSCO Expected to Clash
The bidding war for the reconstruction of Hanyang Apartment, known as the ‘Yeouido No. 1 Reconstruction,’ has resumed. This site was drafted by the Seoul Metropolitan Government in line with Mayor Oh Se-hoon's vision for Yeouido as a financial hub, planning it as a ‘residential complex specialized for financial centers with buildings over 50 floors.’ Given its symbolic significance in Yeouido’s transformation into a super high-rise skyline, major construction companies are expected to fiercely compete for the construction rights.
According to the maintenance industry on the 27th, KB Real Estate Trust posted a bidding announcement on the 24th for selecting a contractor for the reconstruction maintenance project of Hanyang Apartment in Yeouido-dong, Yeongdeungpo-gu, Seoul. This came 20 days after the sudden cancellation of the contractor selection due to controversy over the wording related to bidding eligibility on the 4th.
KB Real Estate Trust, the project implementer for the Hanyang Apartment reconstruction, initially stated in the first announcement that bidders who had been punished or were involved in lawsuits for ‘offering or promising to offer money, entertainment, or other property benefits’ would be restricted from participating. The phrase ‘or lawsuits in progress’ became problematic as it could be perceived as favoring or excluding specific companies. One of the likely bidders, Hyundai Engineering & Construction, might have found it difficult to participate due to ongoing lawsuits related to the Banpo Jugong 1st Complex 1, 2, and 4 districts in Seocho-gu, Seoul. Ultimately, KB Real Estate Trust removed this phrase in the current bidding announcement. From the owners’ perspective, having many contractors participate and compete is advantageous, which likely influenced this decision.
With this, the bidding war for the reconstruction construction rights of Hanyang Apartment has restarted, with Hyundai Engineering & Construction, POSCO E&C, and Samsung C&T Construction Division expected to enter the competition.
Constructed in 1975, the Hanyang Apartment reconstruction carries significant symbolism on its own. Although Yeouido has grown into a financial center, 16 apartment complexes including Hanyang have become aged and neglected since the area was designated as an apartment district in 1976. Despite several development plans being discussed, the project was put on hold in 2018 due to controversies over comprehensive development in Yeouido. Now, the possibility of Hanyang Apartment becoming the leading Yeouido reconstruction project has increased.
The breakthrough in the stalled reconstruction project was largely due to Mayor Oh’s strong commitment to developing Yeouido. Mayor Oh plans to nurture Yeouido as an international financial center, with 50,000㎡ of financial support facilities to be supplied through reconstruction projects. In the case of Hanyang Apartment, it will be developed into a financial center-specialized residential complex combining residential, commercial, and office spaces through a rapid integrated planning process. The Seoul Metropolitan Government plans to upgrade the zoning from a Category 3 residential area to a general commercial area, allowing reconstruction of up to 1,000 households with buildings up to 200 meters high. In the current announcement, KB Real Estate Trust set the construction scale at 956 apartment units from 5 basement floors to 56 floors above ground.
A representative from a major construction company said, “Because of the strong symbolic value of Yeouido, especially as the No. 1 reconstruction project, construction companies will compete with their company names on the line in the Hanyang Apartment bidding war,” adding, “Since reconstruction complexes like Sibeom and Sambu are densely located nearby, the outcome of this project could influence future bidding wars.”
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