If Second Auction Fails, Private Contract Pursued
Lotte Construction Likely to Be Preferred Negotiator
Year-End General Meeting Scheduled for Contractor Selection
Yongsan Sanho Apartment, a complex along the Han River completed in 1977, is set to select its construction company for the fourth time. If it fails in competitive bidding again, it will proceed with a private contract. Recent analysis suggests that Lotte Construction, which submitted a sole bid, is highly likely to be selected as the preferred negotiation partner.
According to the construction industry on the 4th, two companies, Lotte Construction and Joongheung Construction, participated in the site briefing held by the Sanho Apartment Housing Reconstruction Maintenance Association on the 2nd for the selection of the construction company.
The association grants participation eligibility to companies that submit a letter of intent to bid by the 10th. The deadline for submitting the letter of intent is the 18th of next month. The association set conditions in the construction company selection announcement, including a bid deposit of 12 billion KRW, no joint bidding (consortium), and participation under the top-tier brand. The construction cost is 8.3 million KRW per 3.3㎡, with a total construction cost of 302.8 billion KRW, the same as the previous announcement.
The association held the first construction company selection bid in April but it failed. After failing to select a construction company in June and September as well, the association announced the fourth construction company selection at the end of last month. Five companies participated in the site briefing held earlier last month, and Lotte Construction was the sole bidder in the bid that closed on the 23rd of last month. Since competitive bidding was not established, it failed again.
Lotte Construction plans to participate in this bid as well. A Lotte Construction official stated, "Since it is a complex along the Han River and we are considering applying the ‘Le L’ brand, we view participation in this bid positively."
If only Lotte Construction participates in the bid, the association is considering selecting the construction company through a private contract. If the second bid fails, selection through a private contract is possible.
An association official explained, "We sent bid participation proposal letters to the top 10 construction companies on June 10. However, it seems that construction companies are reluctant to participate in competitive bidding for sites that do not have many households or are not in Gangnam. Since it takes more than six months for construction companies to prepare proposals, the likelihood of competitive bidding being established is low, and since no construction company other than Lotte Construction has shown interest, if Lotte Construction participates alone, it will be selected as the preferred negotiation partner."
The general meeting for selecting the construction company will be held on December 28. An association official said, "The members also want to select the construction company quickly, and due to concerns about project delays, we plan to conduct a member vote after selecting the preferred negotiation partner."
Sanho Apartment is located at 118-16, Wonhyo-ro 4-ga, Yongsan-gu, and after reconstruction, it will consist of 7 buildings, 647 households (including 73 rental units), ranging from 3 basement floors to 35 floors above ground. The association received project implementation approval in March. The association plans to pursue increasing the maximum number of floors to 47 through design changes after selecting the construction company.
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