Samsung C&T Proposes 63-Month Construction Period
POSCO E&C Offers 8.91 Million KRW per Pyeong Construction Cost
Member Vote for Contractor Selection Scheduled for 27th
Samsung C&T and POSCO E&C have gone head-to-head to win the redevelopment project for Busan Chokjin 2-1 District. Samsung C&T has pledged to shorten the construction period by two months, while POSCO has committed to drastically lowering the construction cost to the 8 million KRW range per 3.3㎡. With the contractor selection scheduled for the 27th, the competition between the two sides is expected to heat up further.
The Busan Chokjin 2-1 District, where the two construction companies are fiercely competing, is a project to develop a site of 136,727㎡ in Beomcheon-dong, Busan, into 1,902 apartment units ranging from five basement floors to 69 above-ground floors, 99 officetel units, and ancillary welfare facilities. Although there are 310 union members, the project cost reaches a massive 1.3 trillion KRW. After difficulties in negotiating construction costs with GS Engineering & Construction and terminating the contract with them, Samsung C&T and POSCO E&C submitted bids in the contractor re-selection process.
Both construction companies are recognized players in Busan. POSCO leads in redevelopment project wins in Busan, having secured landmark projects such as the ultra-high-rise building “LCT The Sharp” in Haeundae, as well as Daeyeon 8 District, Goejeong 5 District, and Eomgung 3 District. Samsung C&T, ranked first in construction capability evaluation last year, has experience winning major reconstruction projects in Gangnam, Seoul. This gives Samsung C&T an edge in brand recognition. In Busan, Samsung C&T has won redevelopment projects in Oncheon 4 District and Geoje 2 District.
Samsung C&T Proposes ‘2-Month Construction Period Reduction’
Samsung C&T proposed completing the construction within 63 months to win the bid. Reducing the construction period by two months could save more than 100 million KRW per union member. Samsung C&T’s construction cost per 3.3㎡ is 9.69 million KRW, higher than POSCO’s 8.91 million KRW. However, Samsung C&T plans to apply the lower index between the Consumer Price Index and the Construction Cost Index to the construction cost. A Samsung C&T official explained, “Over the past 26 months, the Consumer Price Index rose 10.23%, and the Construction Cost Index rose 17.23%. Applying the arithmetic average (13.73%) would result in a 3.5% higher increase than applying the lower index.” He added, “By shortening the construction period and dramatically accelerating project progress, we will advance move-in dates and increase union members’ benefits.”
Samsung C&T also plans to submit a design plan without permit changes to start construction quickly without additional approvals. Given the large scale of the project, the company intends to secure project funds with the industry’s lowest interest rate and no limit. With a credit rating of AA+, there is no need for a guarantee from the Korea Housing & Urban Guarantee Corporation, so no guarantee fees (400 billion KRW) will be incurred. If the pre-sale asset value exceeds the previous asset value, the refund to union members will be repaid with priority. Profits from option sales during general sales will also be allocated to union members.
Samsung C&T proposed the complex name “Raemian S-Palace Busan.” They emphasized collaboration with global architectural and landscaping designers to create a landmark. Unique community facilities will be introduced, including an infinity ocean pool overlooking the city park and a golf practice range integrated with outdoor landscaping.
POSCO E&C Drastically Lowers Price Per Pyeong
The most eye-catching aspect of POSCO E&C’s bidding strategy is the construction cost. The company lowered its profit margin to propose 8.91 million KRW per 3.3㎡, nearly 1 million KRW less than the previous contractor’s cost. The total project cost is 1.3274 trillion KRW.
POSCO plans to proceed without re-sale to union members and pursue a two-track permit process to start construction in February 2026. The plan is to obtain management disposition approval with the original design and then secure permits for specialized designs during the relocation period. POSCO E&C explained, “In the redevelopment project of Incheon Juan 10 District, we negotiated with the permitting authorities regarding specialized designs during the relocation and demolition period and obtained project implementation change approval in just two months.”
POSCO proposed the high-end brand name “Otier” for the complex and promised to apply luxury brands for finishing materials and furniture. Windows will be from the German luxury brand Becka, kitchen furniture from Italy’s Denovo Cucine, and flooring from Listone Giordano. The parking lot will increase by 471 spaces compared to the existing number. They also proposed to provide full interest-free support for essential project costs.
A union official from Chokjin 2-1 District said, “At the contractor presentation meeting held over the weekend, union members asked many questions about the interest-free project cost limits,” adding, “Even after the meeting, union members have been actively debating, showing great interest.” The contractor selection general meeting will be valid if more than 50% of union members participate. The construction company that receives the majority of votes will be selected as the contractor.
© The Asia Business Daily(www.asiae.co.kr). All rights reserved.
