No.1 Samsung C&T Takes the Lead... Will the Gangnam and Yeouido Redevelopment Project Landscape Change?

The competition among construction companies to secure prime redevelopment project contracts in Seoul’s Gangnam, Seongsu, Yeouido, and other areas is expected to intensify. This is because Samsung C&T, which has ranked first in construction capability evaluations for 10 consecutive years, has expressed its determination to actively pursue landmark complex contracts amid the gradual decrease of highly profitable complexes within Seoul city.

Raemian Rio Cent Munju [Photo by Samsung C&T]

On the 23rd, Kim Myung-seok, head of Samsung C&T’s Housing Division, introduced a new residential model at the ‘Raemian, The Next’ presentation held at Raemian Gallery in Songpa-gu, stating, “We intend to submit bids for redevelopment projects underway in Yeouido, Seongsu, Apgujeong, and other areas to lead the housing market.”

Kim said, “It is true that we have been somewhat passive in bidding based on factors such as sales viability, project feasibility, and compliance for fair competition,” adding, “However, with the recent revision of Seoul city ordinances, a large volume of redevelopment projects is expected to emerge. We plan to participate actively.”

Since last month, the city has allowed redevelopment project sites to select construction companies once the union establishment is approved. Previously, construction companies could only be selected after the union was established and the project implementation was authorized, so this change has advanced the timing.

According to industry sources, this ordinance revision enables 86 redevelopment project unions to select construction companies. Thirty-two of these are concentrated in the three Gangnam districts (Gangnam, Seocho, Songpa), with Gaepo Jugong 5 Complex scheduled to select a construction company next month. There are also four complexes in Seongsu Strategic Redevelopment Zone Districts 1 to 4 in Seongdong-gu and Yeouido-dong in Yeongdeungpo-gu, which will compete for ultra-high-rise landmark status within the region. Among them, Hanyang Apartment, the first Yeouido reconstruction project, was initially expected to be a two-way contest between Hyundai Engineering & Construction and POSCO E&C, but Samsung C&T is also reportedly entering the race, adding tension.

Samsung C&T has been conservative in bidding for redevelopment projects. After winning the contract for ‘Raemian One Bailey’ (integrated reconstruction of Sinbanpo 3rd and Gyeongnam Apartments) in 2015, it returned in 2020 with ‘Raemian One Pentas’ (Sinbanpo 15th reconstruction) after five years. That year, it secured a total of two construction rights, including ‘Raemian Trini One’ (Banpo Jugong 1st Complex 3rd District reconstruction), and in 2021 and last year, it secured four and five projects respectively (including public projects). This year, it has recorded two remodeling and one redevelopment project, but no reconstruction contracts yet. In terms of value, the annual amount does not exceed 2 trillion won.

This contrasts with last year when six of the top 10 construction companies achieved over 1 trillion won in orders in the first half alone. Among them, Hyundai Engineering & Construction recorded over 7 trillion won in orders across 10 projects, while GS Engineering & Construction and Lotte Engineering & Construction each achieved over 3 trillion won and 2 trillion won respectively.

However, there is speculation that the redevelopment project order landscape will change this year. Along with Samsung C&T’s increased proactiveness, GS Engineering & Construction, which has secured major redevelopment projects in the Gangnam area, suffered a blow to its safety image due to the underground parking lot collapse accident at an apartment construction site in Geomdan New Town, Incheon. Construction companies are keenly watching the shift in the landscape and plan to approach unions with differentiated services. A representative from a major construction company said, “Once redevelopment projects start in Gangnam, Yeouido, Mokdong, and other areas, there will be no new complexes for about 10 years afterward,” adding, “Several construction companies are already focusing on major complexes, and the trend of ‘selection and concentration’ seems to be intensifying.”