Two Bidders, Hyundai Construction and Samsung C&T, Submit Participation Guarantees
Competition After 15 Years... Both Express Strong Intent to Win
"At Raemian One Bailey Level" vs "Formation of DH Town"
Samsung C&T and Hyundai Engineering & Construction, ranked first and second in construction capability evaluation, will compete for the construction rights of the Hannam 4 District redevelopment project in Yongsan-gu, Seoul. This is a rare competitive scenario amid the construction industry's selective bidding for maintenance projects. It is the first direct competition between the two construction companies in 15 years since 2009.
According to the Hannam 4 District association on the 8th, only Hyundai Engineering & Construction and Samsung C&T submitted bid participation guarantees by the deadline the day before. The bid participation guarantee is a procedure that asks whether a company will participate in the main bid; companies that do not submit this guarantee cannot participate in the main bid. Thus, the competition for selecting the construction company has effectively been narrowed down to two companies.
The maintenance industry is paying attention to the formation of a competitive construction company selection structure for the first time in a while. The number of maintenance projects selecting construction companies through competitive bidding has sharply decreased this year. Nine out of ten projects selected construction companies through negotiated contracts without competition. Only two projects, the reconstruction of Hanyang Apartment in Yeouido and the Dogok Gaepo Hanshin reconstruction in Gangnam-gu, were selected through competitive bidding. Hannam 4 District is likely to be the first case in redevelopment areas. An industry insider said, "Because the location offers a view of the Han River and has a relatively large number of general sale units, it is evaluated as having good business potential even within Hannam New Town, attracting interest from competing companies."
Market interest is growing especially as the two construction companies, ranked first and second in construction capability evaluation, face off. The competition for construction rights between Samsung C&T and Hyundai Engineering & Construction is the first in 15 years since the Bucheon Dodang 1-1 District redevelopment in 2009, which Hyundai Engineering & Construction won. The last competition in Seoul was the reconstruction of Jeonggeum Village in Dongjak-gu in 2007, where Hyundai Engineering & Construction also won, leading to the construction of 'Isu Hillstate.'
Both companies have shown strong determination to win the Hannam 4 District project, and the market finds it difficult to predict the outcome given the long preparation period. Samsung C&T, which has been selectively bidding on major projects, has been actively preparing proposals for two years. At a site briefing held at the association office late last month, a dozen employees appealed with a banner stating, "The best location Hannam 4 District. Let's share a brilliant future together." Samsung C&T plans to emphasize its capability demonstrated in landmark complexes such as Raemian One Bailey and Raemian One Pentas.
Hyundai Engineering & Construction has also been steadily focusing on the 4 District after winning the adjacent Hannam 3 District. Hyundai Engineering & Construction aims to create its high-end brand ‘The H Town’ by combining Hannam 3 and 4 Districts. They emphasize that redeveloping the two districts together can reduce construction costs such as civil engineering expenses.
As the selection of the construction company approaches, competition is intensifying. The two companies have already had a dispute over the wording of the announcement before issuing the bid notice. Controversies over illegal promotion during the publicity process have also been ongoing. Since the 20th of last month, individual promotions by construction companies meeting with association members have been completely banned in Hannam 4 District. A ‘one-strike-out’ rule is in place, which disqualifies any company caught even once from participating in the bid. An industry insider said, "Suspicions of illegal individual promotions are continuously raised, and whether any violations are detected could be a key factor in the competition for the construction rights."
The Hannam 4 District redevelopment project involves building a large complex of 51 buildings with 2,331 households, ranging from 7 basement floors to 22 above-ground floors, in the 360 area of Bogwang-dong, Yongsan-gu. Of these, 350 units are public rental housing, and 1,981 units will be supplied for general sale. The total project cost is 1.5723 trillion KRW. The association will close the main bid on the 18th of next month and hold a general meeting of association members on January 18 next year to finalize the selection of the construction company.
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