First Round Bid Invalid as Hyundai Engineering & Construction Is Sole Bidder
Association to Announce Second Round of Bidding on August 12
High Possibility of Private Contract with Hyundai Engineering & Construction
In Zone 2 of the Apgujeong redevelopment project in Gangnam-gu, Seoul, which is the first among the Apgujeong sites to select a construction company, Hyundai Engineering & Construction was the sole bidder. As a result, the bid was declared invalid due to the lack of competitive bidding.
According to the maintenance industry on August 11, the Apgujeong Zone 2 redevelopment association closed the bidding for the selection of a construction company, with only Hyundai Engineering & Construction submitting a bid. The association is expected to announce a second round of bidding on August 12 and hold a site briefing session on August 20. The general meeting to select the construction company is scheduled for September 27.
With other construction companies withdrawing, the likelihood of Hyundai Engineering & Construction securing the contract without competition has increased. According to the Urban and Residential Environment Improvement Act, if a general competitive bid fails twice due to no bids or a single bid, the association can select a construction company through a private contract.
The association is strongly committed to expediting the project, starting with the selection of the construction company. In a newsletter published at the end of June, the association had already provided members with information on the future project schedule. The association explained, "If only Hyundai Engineering & Construction participates at the bid closing on the 11th and the bid is declared invalid, we will re-announce the bid the next day. If only Hyundai Engineering & Construction attends the site briefing on the 20th, the failure will be confirmed, and we can designate them as the preferred negotiation partner on the 21st."
The association also stated that if at least one other company besides Hyundai Engineering & Construction attends the second briefing on the 20th, the second round of bidding will close on October 10, 45 days later. After that, the general meeting to select the construction company could be held on November 22.
Initially, a major competition between Hyundai Engineering & Construction and Samsung C&T was anticipated for this project, but Samsung C&T announced its withdrawal, citing project conditions and other factors. The association, after consulting with the Simtong Planning Advisory Group, prepared a maintenance plan that prohibits alternative design proposals and specifies that the interest rate standard must be presented in the form of 'CD+additional rate.' Other conditions included a ban on proposals for relocation loans with an LTV of over 100%, a ban on additional relocation loan interest rate proposals, and a ban on proposals utilizing other financial techniques.
The association explained that the reason for prohibiting proposals utilizing other financial techniques was that financial methods such as issuing corporate bonds or ABS could carry higher risks than bank loans. In addition, products with a fixed maturity at the time of issuance could be exposed to unpredictable refinancing risks, and in the event of project delays, early repayment could be demanded.
As Hyundai Engineering & Construction is increasingly likely to win the contract, other construction companies are hesitant to participate. A representative from one construction company said, "In Apgujeong, each company is preparing to participate in specific zones, but it is not easy to compete for more than one contract."
To win the Apgujeong Zone 2 project, Hyundai Engineering & Construction applied for the trademark 'Apgujeong Hyundai,' reinforcing its image as the successor to the legacy of Apgujeong Hyundai. The company proposed building a connecting passage between the apartment complex, Hyundai Department Store, and Apgujeong Station. It also signed an agreement with Seoul Hyundai Graduate School Foundation to develop school land into educational facilities. In addition, a premium concierge service was introduced to provide customized consulting for assets, relocation, and move-in for Apgujeong association members.
The Apgujeong Zone 2 redevelopment project will construct 14 buildings ranging from five basement floors to 65 above-ground floors, with a total of 2,571 apartment units and various welfare facilities in the 434 Apgujeong-dong area of Gangnam-gu, Seoul. The estimated construction cost is 2.7488 trillion won, with a construction cost of 11.5 million won per 3.3 square meters. The Apgujeong Zone 2 association set conditions in the first announcement, including a ban on consortiums and a requirement for a 100 billion won cash deposit as a bid guarantee.
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