'Samsung C&T vs. Daewoo E&C': First Head-to-Head Bid in Five Years
Attention Turns to 4th Complex as Samsung C&T Competes for Both Projects
Samsung C&T and Daewoo E&C (according to construction capability evaluation ranking) are set to face off head-to-head in the bidding for Gaepo Useong 7th, known as the "final piece of the puzzle" in the Gaepo residential development district's reconstruction projects. This marks their first direct competition in five years since the Banpo 3rd District bidding war. Fierce behind-the-scenes maneuvering is already underway to secure this major project in Gangnam, which is valued at a total construction cost of 700 billion KRW.
According to the Gaepo Useong 7th Apartment Reconstruction and Maintenance Association on June 20, the bidding for contractor selection closed at 3 p.m. the previous day, with Samsung C&T and Daewoo E&C as the two participants.
'Samsung C&T vs. Daewoo E&C': First Competition in Five Years
The 7th complex, completed in December 1987, consists of 15 buildings with a maximum of 14 floors and a total of 802 units. With a floor area ratio of just 157%, it is considered a prime site with excellent business potential. The association has set the construction cost at 8.8 million KRW per pyeong (3.3 square meters), for a total construction cost of 677.8 billion KRW.
There was speculation that the bidding could become a three-way contest, as POSCO E&C was reportedly carefully considering whether to participate. However, POSCO E&C ultimately decided not to submit a bid, after deliberating until just before the deadline. It appears the company was wary of the potential for overheated competition in a three-way race.
With POSCO E&C opting out, Samsung C&T and Daewoo E&C are facing off for the first time in five years since the Banpo 3rd District (Raemian Trini One) project. Both companies have expressed strong intentions to win the contract early on and have been working to secure votes from association members.
In particular, unlike its previous decisions to skip bids for Songpa-gu Jamsil Useong 1st, 2nd, and 3rd complexes and Gaepo Jugong 6th and 7th complexes, Samsung C&T is going all out for the 7th complex. On June 16, three days before the bid deadline, Samsung C&T prepaid 15 billion KRW in cash out of the 30 billion KRW bid deposit. The company also promised a landmark design to complete the Gaepo skyline by collaborating with global design firm Arcadis.
Samsung C&T is reportedly planning to revamp the BI (Brand Identity) of its "Raemian" brand. The company may launch a new design as early as this year, and attention is focused on whether the new brand design will be applied to the 7th complex.
Daewoo E&C CEO Kim Bohyun personally visited the site to demonstrate the company's strong commitment to winning the contract. On June 12, Kim visited the complex and emphasized that Daewoo E&C would offer the best business terms so that Gaepo Useong 7th could become a "game changer" in Gangnam's reconstruction market. Daewoo E&C plans to collaborate with Jean-Michel Wilmotte, who has participated in the design of renowned buildings such as the Louvre Museum in France and Incheon International Airport, for the complex's design.
The brand war between the two companies is also expected to intensify. Recently, Daewoo E&C has been revamping its housing brands to enhance its competitiveness in securing contracts. The company decided to apply its renewed high-end brand "Summit" to Gaepo Useong 7th, making it the first application in Gangnam. A Daewoo E&C representative stated, "With the brand renewal, not only the design but also the exterior, product offerings, and internal programs will change," adding, "Gaepo Useong 7th will be the first complex in the Gangnam area to feature the renewed Summit brand." If Daewoo E&C wins this contract, it could establish a "Summit Town" of over 2,400 units in the Gaepo area, following the Gaepo Jugong 5th complex.
However, it appears that differentiated facility features will ultimately determine the outcome of this bidding. Ma Jonghyuk, president of the Gaepo Useong 7th Association, stated, "Brand value is important, but the most critical factor is facility differentiation," adding, "Our goal is to create apartments whose future value increases over time, with features such as minimized floor noise, odor-blocking bathrooms, and flooring that requires minimal maintenance."
Outcome of 7th Bidding Draws Attention to 4th... Samsung C&T Competes for Both Projects
Meanwhile, as the competition for the 7th complex has narrowed to two contenders, attention is also turning to the competitive landscape for Gaepo Useong 4th. Previously, Samsung C&T, POSCO E&C, and Lotte E&C had all expressed interest in bidding for both complexes. Some industry watchers predicted that, rather than pursuing both projects, companies would likely focus on one, meaning that those who chose to bid for the 7th would not participate in the 4th. For this reason, Daewoo E&C originally planned to set up a promotional booth for the 4th complex last month but ultimately decided to focus on the 7th instead.
Banners for promotional briefings from four construction companies are hung within the Il Gaepo Woosung 4th complex. Photo by Lee Jieun
In contrast, Samsung C&T, the only company among the three to participate in the 7th bid, continues to express its intention to bid for the 4th as well. A Samsung C&T representative stated, "The 4th complex is a key landmark in Dogok-dong, and the 7th is the final piece in Gaepo-dong's reconstruction. As these are projects that will define the peak of Gaepo, we plan to actively participate in both."
Currently, four companies?Samsung C&T, HDC Hyundai Development Company, Lotte E&C, and POSCO E&C?are showing interest in the 4th complex. Some predict that, since POSCO E&C ultimately decided not to bid for the 7th after much deliberation, the company will now focus all its efforts on winning the 4th. The Gaepo Useong 4th complex is expected to announce its contractor bidding notice between the middle and end of next month.
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