Sanggye 5 District Phase 2 Construction Bid Announcement
GS·Lotte Consortium Likely to Win
Mia 9-2 District to Pursue Private Contract
Hyundai·Hyundai Steel Consortium Highly Possible
Redevelopment complexes in northern Seoul are consecutively selecting construction companies through private contracts. Although they are waiting for competitive bids from construction companies, the trend of selective contracting among builders has intensified, making it inevitable to select construction companies through private contracts. Construction companies are engaging in selective contracting because, unlike areas like Gangnam in Seoul where strategic bidding is necessary, they feel burdened by the increased costs resulting from competition with other builders.
Sanggye 5 District, GS-Lotte Consortium Likely to Win Bid
The Sanggye 5 District Redevelopment Maintenance Project Association will hold a second on-site briefing session on the 6th to select a construction company. This is a procedure following the reannouncement of the construction company bidding at the end of last month. After the first briefing session last month, only the GS-Lotte Construction consortium submitted a bid commitment letter, resulting in a failed bid, prompting the association to reannounce the bidding. The deadline for bids after the second briefing session is until the 23rd of next month.
If only the GS-Lotte Construction consortium participates in this announcement as well, it is highly likely that the construction company will be selected through a private contract. According to current law, if competitive bidding fails more than twice, a private contract with the participating construction company is possible. A representative of the Sanggye 5 District association said, "Since no construction company other than the GS-Lotte Construction consortium participated in the first bid, theoretically a private contract is possible, but we need to observe the progress." GS Construction stated, "We are positively considering the re-bid."
Sanggye 5 District is a project to build 21 buildings with 37 floors above ground and 3 floors underground, comprising 2,016 apartment units. The construction cost is 700.5 billion KRW (7.78 million KRW per 3.3㎡), the same as the previous announcement. The association is proceeding with the selection of the construction company aiming to hold a general meeting as early as February next year.
Mia 9-2 District to Select Construction Company via Private Contract
After the first and second rounds of construction company selection failed in Mia 9-2 District, the association announced a construction company selection for a private contract. The Hyundai Construction-HDC Hyundai Development Consortium was the sole bidder in the first and second rounds, so competitive bidding did not take place. If this consortium bids again, it is highly likely that a private contract will be made.
The association set the qualifications for participating in the private contract bidding as companies that attended at least one on-site briefing session, submitted a bid proposal, and paid a bid deposit of 10 billion KRW and a performance bond insurance certificate of 15 billion KRW. Mia 9-2 District is a project to build 22 buildings with 25 floors above ground and 6 floors underground, comprising 1,798 apartment units. The construction cost is set at 650 billion KRW (6.8 million KRW per 3.3㎡).
An HDC Hyundai Development official said, "We plan to participate in the construction company selection by forming a consortium with Hyundai Construction."
The Jung-hwa 5 District Public Redevelopment Maintenance Project also reannounced the bidding for selecting a construction contractor (private developer) and will hold an on-site briefing session on the 8th. The Korea Land and Housing Corporation (LH) is in charge of the project, and the construction cost is set at 7.8 million KRW per 3.3㎡. GS Construction submitted a sole bid commitment letter last month, but since competitive bidding did not materialize, the project was canceled. The residents' representative meeting will close the bidding by the 3rd of next month and hold a residents' general meeting to select the construction company in January next year. Jung-hwa 5 District is a project to build 1,610 apartment units with a maximum height of 35 floors in the Jungnang-gu Jung-hwa-dong 122 area.
An industry insider said, "Construction companies avoid competitive bidding because the manpower and costs involved increase through competition," and analyzed, "They also consider the negative impact on subsequent project bids if they fail to win the contract." Another insider explained, "If it is a project with symbolic significance like Gangnam-gu or Hannam-dong in Seoul, where winning the bid is essential, companies can endure competition, but for other projects, feasibility review comes first."
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