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Major Construction Companies Eyeing Construction Rights
This year, competition among major construction companies to secure construction rights for prime redevelopment and reconstruction projects such as Hannam 4 District redevelopment in Yongsan-gu, Seoul, and Apgujeong 2-5 District reconstruction in Gangnam-gu is expected to intensify. They are likely to target projects with guaranteed profitability by emphasizing high-end brands and specialized designs.
According to the maintenance industry on the 7th, the Hannam 4 District redevelopment site is scheduled to select a construction company in the first half of this year.
Hannam 4 District is considered the most profitable project within Hannam New Town due to its small number of union members. Through redevelopment, an apartment complex of 2,331 households will be built, which is 164 more than originally planned. Samsung C&T, Hyundai Engineering & Construction, POSCO E&C, and GS Engineering & Construction are reportedly showing strong interest.
Attention is also focused on the reconstruction of Apgujeong 2-5 District, a representative affluent area in Korea, as the selection of a construction company is likely to take place in the second half of this year.
In particular, Hyundai Engineering & Construction, which achieved 'No. 1 in orders' in the urban maintenance sector last year, is moving swiftly. Last month, Hyundai E&C established an Apgujeong Task Force (TF) team under the Urban Maintenance Sales Office in its organizational restructuring. The plan is to proactively respond from the pre-bidding stage and further solidify its brand position and status in the high-rise areas along the Han River.
Hyundai E&C is also restarting efforts to win the reconstruction contract for Hanyang Apartments in Yeouido-dong, Yeongdeungpo-gu. Its competitor is POSCO E&C. Last year, the two companies offered unprecedented conditions, described as a cutthroat competition. POSCO E&C emphasized a 1 trillion KRW project cost responsibility procurement, while Hyundai E&C highlighted 'zero contribution fees.'
This project seemed poised to earn the title of 'Yeouido’s first reconstruction,' but the Seoul Metropolitan Government put a brake on it, temporarily halting the project. The issue was that the project area included sites where some owners, such as Lotte Super, did not consent. Subsequently, KB Real Estate Trust, the project implementer, completed land purchase negotiations with Lotte Shopping, and the project is expected to regain momentum.
Construction companies plan to approach bidding conservatively this year due to the expected sluggish market conditions, but they are determined not to miss out on large-scale redevelopment projects in prime locations like Apgujeong and Hannam. Considering the economic cycle, they view securing future work and symbolic value positively.
A construction company official said, "We are deeply concerned about rising construction costs and specialized designs, but since Apgujeong and Hannam are projects with guaranteed profitability and construction costs, we have no choice but to actively participate. It will be worth watching what conditions they propose."
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