Samsung C&T vs GS Construction, Facing Off at Jamsil Woosung After 10 Years?

Bidding Deadline for Jamsil Woosung Reconstruction Project Worth 1.6 Trillion KRW Set for April 4
GS Engineering & Construction Previously Won Seocho Mujigae Project

Samsung C&T and GS Engineering & Construction are expected to compete for the construction rights of the Jamsil Woosung 1, 2, and 3 reconstruction projects in Seoul, valued at 1.6 trillion KRW, marking their first face-off in 10 years. This is the first time since the Seocho Mujigae Apartment reconstruction project. It is anticipated to be the second big match this year following the bidding battle between Samsung C&T and Hyundai Engineering & Construction for the Hannam 4 district.

Bidding Deadline March 4, Will It Be a Return Match After 10 Years?

The Jamsil Woosung Apartment Reconstruction Association will close the bidding for the selection of the construction company by April 4. This is the second time the construction company selection bidding has been held for this complex. During the first bidding in September last year, GS Engineering & Construction submitted a sole bid participation commitment letter, resulting in a failed bid.

In December last year, the association increased the construction cost from 8.9 million KRW to 9.2 million KRW per 3.3㎡, raising the total construction cost from 1.6198 trillion KRW to 1.6934 trillion KRW and re-announced the bidding. The Jamsil Woosung reconstruction project involves building 2,860 apartment units and neighborhood living facilities (commercial spaces) on the site at 101-1 Jamsil-dong, Songpa-gu, Seoul, with buildings ranging from 4 basement floors to 49 above-ground floors. The association plans to hold two joint briefing sessions on April 19 and 26, according to the construction company selection publicity guidelines. After the joint briefings, they are expected to set up a publicity center and actively promote to the association members.

Both companies are strongly determined to secure this prime project. Samsung C&T needs to increase its housing project orders this year due to a decrease in semiconductor factory orders. GS Engineering & Construction aims to improve the image of its ‘Xi’ brand through this project. In the 2015 bidding for the Seocho Mujigae Apartment (Seocho Grand Xi) reconstruction construction rights, where the two companies competed, GS Engineering & Construction won. At that time, GS Engineering & Construction received 725 votes out of 1,132, leading Samsung C&T’s 402 votes by about 323 votes.

Jamsil Woosung 1, 2, and 3 Apartment Complex View. Photo by Kim Hye-min

Samsung C&T Expands Orders vs GS Brand Image Renewal

Samsung C&T is expected to participate more aggressively in housing project orders this year than in previous years. Samsung C&T is expanding orders mainly in major redevelopment projects in Seoul, regardless of reconstruction or remodeling. Having secured the construction rights for Hannam 4 district against Hyundai Engineering & Construction, being the top-ranked construction company in construction capability evaluation, and the strong preference for the Raemian brand among consumers pose challenges for competitors. Since the end of last year, Samsung C&T has been striving to make an impression by placing brand advertisements at bus stops near the complex. However, the fact that Samsung C&T requested the association to exclude the ‘responsible completion commitment’ condition when announcing the first construction company selection notice may be a demerit in the eyes of association members.

GS Engineering & Construction is in urgent need of large-scale redevelopment project orders following its brand renewal. After the parking lot collapse accident at an apartment in Geomdan, Incheon, GS Engineering & Construction renewed its ‘Xi’ brand to improve its image, and securing Jamsil Woosung is seen as a crucial turning point for this improvement. GS Engineering & Construction has been increasing its orders in the Songpa-gu area, including Macheon, Garak, and Geoyeo, and winning the Jamsil and Seongsu projects would lay the groundwork for entering Gangnam-gu. GS Engineering & Construction has also invested 7 to 8 years preparing for the Jamsil Woosung bid.

However, recent conflicts over construction cost increases at major redevelopment projects currently under GS Engineering & Construction’s construction may act as a demerit. GS Engineering & Construction requested an additional 480 billion KRW for Shinbanpo 4 district (Maple Xi) and 103.2 billion KRW for Cheolsan Jugong 8 and 9 complexes (Cheolsan Xi) as extra construction costs.

An industry insider said, "While the construction cost and detailed bidding proposals need to be reviewed to know for sure, GS Engineering & Construction’s long-term efforts and interactions with association members also influence members’ perceptions and voting results," adding, "Issues like the Maple Xi construction cost increase could work in Samsung C&T’s favor."