Hyundai and HDC Hyundai Development Company Skip Seongsu 1 District Briefing... The Real Reasons [Real Estate AtoZ]

Seven Companies Attend Briefing on the 29th
Hyundai and HDC Hyundai Development Company Absent
Final Decision Pending Before Delegates' Meeting
New Briefing to Be Held if Bidding Conditions Are Eased

As the Seongsu 1 District, considered a major redevelopment project along the Han River Belt, officially moves forward with contractor selection, Hyundai Engineering & Construction and HDC Hyundai Development Company did not attend the site briefing session. The absence of these two companies, both previously regarded as strong contenders alongside GS Engineering & Construction, has drawn attention to the reasons behind their decision not to participate.

According to the maintenance industry on August 29, the Seongsu 1 District redevelopment union held a contractor bidding briefing session at 2 p.m. that day at the union office. A total of seven companies participated in the session: GS Engineering & Construction, Daewoo Engineering & Construction, Lotte Engineering & Construction, Hoban Construction, Kumho Construction, SK Ecoplant, and BS Hanyang.

On the 29th, a sign opposing private contracts was posted in front of the Seongsu 1 District union office in Seongsudong 1-ga, Seongdong-gu, Seoul. Photo by Lee Ji-eun

On August 18, Hyundai Engineering & Construction and HDC Hyundai Development Company sent an official letter to the union requesting that excessive bidding guidelines be relaxed. The guidelines disclosed by the union included clauses such as a ban on proposing priority allocation of premium floors to union members, restrictions on financial terms, a commitment to guaranteed completion except in cases of natural disasters or war, a ban on offering discounted prices to union members, and a ban on submitting alternative designs or additional ideas.

Both companies believe these are toxic provisions that favor a specific construction company. Since GS Engineering & Construction has invested significant effort in this project for a long time, the only way to overturn the current landscape would be to propose differentiated terms; however, these clauses have become obstacles.

The enormous amount of the bid deposit is also cited as a reason why both companies hesitated to participate. The requirement set by the Seongsu 1 District union for a full cash deposit of 100 billion won is considered burdensome even within the maintenance industry. From the perspective of these companies, with their options already limited by the bidding conditions, the financial burden of raising the deposit was likely a significant deterrent.

Delegates' Meeting on the 4th to Discuss Easing Bidding Guidelines... Hyundai and HDC Hyundai Development Company Still Weighing Options

However, it is too early to assume that GS Engineering & Construction will be awarded the contract through a private agreement. The delegates' meeting scheduled for September 4 is expected to be a turning point that will determine whether the two companies will participate in the bidding.

At the delegates' meeting, the union will discuss the possibility of invalidating the current contractor selection regulations. The agenda includes removing restrictions such as priority allocation of premium floors to union members, guaranteeing premiums upon move-in, and bans on proposing general sale prices, union member sale prices, and cost-sharing amounts, as well as easing the excessive obligation for guaranteed completion.

If the agenda is approved, a new site briefing session will be held to reflect the revised bidding guidelines. This means that even if a company did not attend the initial briefing, it can still participate in the contractor selection process by attending the new session and submitting a letter of intent to bid.

A representative from Hyundai Engineering & Construction stated, "It is true that we did not attend the site briefing session, and we are currently waiting to see how the union proceeds." A representative from HDC Hyundai Development Company commented, "We will decide whether to participate in the bidding after monitoring future developments."