Exclusive Bid for Redevelopment of Seoul Noryangjin 1 District
Cumulative Orders Exceed 2 Trillion Won in Just 2 Months This Year
'Determination' to Win Yeouido Hanyang Apartment Contract
POSCO E&C has put its life on the line in the maintenance project bidding war since the beginning of the year. Competing with Samsung C&T in Busan, it secured a maintenance project worth over 1 trillion won, achieving orders exceeding 2 trillion won in less than two months. Starting this month, it has also thrown its hat in the ring to capture the biggest prize in Noryangjin, Seoul.
Perspective rendering of Hanyang Apartment reconstruction in Yeouido by POSCO E&C / Image courtesy of POSCO E&C
According to the maintenance industry on the 16th, POSCO E&C submitted a sole bid yesterday for the selection of the construction company for the redevelopment of Noryangjin 1 District in Dongjak-gu, Seoul. Since this is the second bidding after a failed attempt last year, the association is highly likely to enter into a private contract with POSCO E&C.
Considered the biggest prize within the Noryangjin New Town, this project has a construction cost exceeding 1 trillion won. The association proposed a construction cost of 7.3 million won per 3.3㎡. However, with rising raw material prices and labor costs, issues regarding construction cost increases emerged, and other major construction companies turned away citing reduced profitability.
On the other hand, POSCO E&C, riding the momentum from recently winning the redevelopment project of Chokjin 2-1 District in Busanjin-gu, Busan, also challenged the bid for the construction rights of Noryangjin 1 District. The Chokjin 2-1 District in Busan is also a large-scale project with construction costs exceeding 1 trillion won. POSCO E&C competed against Samsung C&T and succeeded in securing its first order last month. POSCO E&C proposed conditions such as applying the high-end brand 'Otier' for the first time in Busan. At the same time, it submitted a bid price lower than Samsung C&T. Samsung C&T also put in its all, as this was its first competitive bid in three years since the Banpo 3 District reconstruction project in Seocho-gu in 2020, but the victory went to POSCO E&C.
This year, POSCO E&C has secured orders including the remodeling of Byeolbit Village 8 Complex Booyoung Apartments in Goyang-si, Gyeonggi Province (498.8 billion won), and the redevelopment of Sanbon 1-dong near Geumjeong Station in Gunpo-si (282.1 billion won), in addition to this project. The cumulative order amount is 2.1083 trillion won. POSCO E&C has achieved annual order results exceeding 4 trillion won over the past three years, and it secured about half of that in just two months. If it also wins the Noryangjin 1 District project, the cumulative order amount for this year will enter the 3 trillion won range.
POSCO E&C’s next bidding battle is expected to unfold in Yeouido. POSCO E&C has shown determination for the reconstruction project of Hanyang Apartments in Yeouido and is preparing for a showdown with Hyundai Engineering & Construction. Originally spotlighted as the ‘first reconstruction in Yeouido,’ the project’s construction company selection bidding guidelines were halted in October last year due to Seoul city’s indication of legal issues. The bidding guidelines issued by the developer, KB Real Estate Trust, included the Lotte Super site, but the actual owner, Lotte Shopping, had not given consent. Subsequently, KB Trust negotiated with Lotte Shopping and agreed to purchase the 1,482㎡ site for 89.8 billion won, bringing the issue to a close.
The selection process for the construction company of Yeouido Hanyang Apartments will resume next month. Some expect it to be a tough bidding war as POSCO E&C will face Hyundai Engineering & Construction, ranked second in construction capability evaluation. POSCO E&C has proposed project conditions applying the Otier brand while lowering the total construction cost to 702 billion won.
A construction industry official said, "POSCO E&C was vigorously pursuing remodeling project orders just a few years ago, but recently it has been expanding its influence in maintenance projects. It appears to be a strategy to actively secure a stronger foothold in maintenance projects and lock in many lucrative orders during a period when the construction market is not favorable."
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