Selection of Construction Company for Sanggye 5 District... Interest from Lotte, GS Construction, and Others

11 Construction Companies Participate in On-Site Briefing
No Clause Prohibiting Joint Bidding in Tender Conditions
Plans to Expand Up to 39 Floors and Larger Medium-Sized Units

Sanggye 5 District, located near Danggogae Station on Line 4, is set to select a construction company. As a large-scale project with nearly 2,000 households and no prohibition on consortiums, it is expected that construction companies may form alliances to participate.

Location Map of Sanggye 5 District

According to the construction industry on the 14th, 11 companies including Lotte Construction, GS Construction, DL E&C, Hyundai Construction, Samsung C&T, POSCO E&C, Daewoo Construction, Kumho Construction, Hanyang, HDC Hyundai Development Company, and Hyundai Engineering participated in the site briefing held by the Sanggye 5 District Redevelopment Maintenance Project Association on the 10th. The association grants bidding qualifications to companies that submit a letter of commitment within 14 days among those who attended the site briefing. The bidding deadline is November 25.

The Sanggye 5 District housing redevelopment maintenance project involves constructing 21 buildings ranging from three basement floors to 37 above-ground floors, with 2,016 apartment units and auxiliary facilities, on the site at 109-43, Sanggye-dong, Nowon-gu. The construction cost is 7.78 million KRW per 3.3㎡, with a total construction cost of 700.55329 billion KRW.

The association did not include a clause prohibiting joint contracts in the bidding qualifications. Construction companies are likely to form consortiums to participate before the selection of the construction company. Industry insiders reported that Lotte Construction, GS Construction, and DL E&C have a strong intention to participate in the bidding. A Lotte Construction official said, "This is a key project we are closely monitoring, and we will do our best to win the contract." A GS Construction official also said, "We are actively considering participating in the bidding."

Heo Won-moo, chairman of the Sanggye 5 District association, explained, "Even if a construction company participates alone, it is not easy to raise project financing (PF), so we did not include a clause prohibiting joint contracts. Nowadays, there are not many construction companies willing to participate in redevelopment projects alone. How construction companies propose the project is more important."

Sanggye 5 District received approval for the establishment of the association in 2009. In the same year, Hyundai Construction, Doosan Construction, and Kolon consortium were selected as the construction companies, but the selection was invalidated due to violations of bidding qualifications. In 2014, the Supreme Court ruled the construction company selection contract null and void. In June 2020, the existing association chairman was dismissed, and a new executive team was launched in 2021. Last year, the redevelopment promotion plan was revised, expanding the total district area and increasing the floor area ratio from 260% to 290%.

The association is preparing for architectural review by changing the project plan to increase the maximum number of floors to 39 and increase the number of medium and large-sized units. The plan reduces units of 39㎡ and eliminates 49㎡ units, while increasing the number of 52㎡ units, adding 74㎡ units, and expanding the number of 102㎡ and 109㎡ units. The total number of households is expected to decrease to about 1,900 compared to the original plan. Chairman Heo explained, "Originally, there were many small units and a high rental ratio, but during the architectural review process, by increasing the floor area ratio, we will increase medium and large-sized units to improve profitability."

Nearby, Sanggye 1 District received project implementation approval in 2020, and Sanggye 2 District in 2021. The construction company for Sanggye 1 District is Hyundai Development Company, and for Sanggye 2 District, Daewoo Construction and Dongbu Construction. Sanggye 2 District is preparing for management disposition approval, and due to internal conflicts within the association, the executive team is vacant and a new chairman will be elected. Sanggye 3 District, promoted as a public redevelopment, has passed the redevelopment promotion plan decision. Sanggye 4 District (Nowon Central Prugio) and Sanggye 6 District (Nowon Lotte Castle Signature) completed occupancy in January 2020 and June 2023, respectively.