Seongsu District 2 Stands Firm on "No Private Contracts"... Bidding Fails Due to No Submissions [Real Estate AtoZ]

DL E&C Withdraws Despite Expectations of Sole Bid
Union’s “Competitive Bidding Principle, No Private Contracts” Drives Companies Away
Internal Turmoil and Union President’s Resignation Delay Process to Next Year
Both Districts 1 and 2 Face Delays in Seongsu Strategic Maintenance Zone
Major Construction Firms Take Cautious Approach

The selection of a construction company for Seongsu Strategic Maintenance Zone District 2 (District 2) in Seongdong-gu, Seoul has ultimately failed due to a lack of bids. The union officially announced that it would not proceed with a private contract in the case of a sole bidder, leading DL E&C, the leading candidate, to also withdraw. As a result, the selection of the construction company is now expected to be postponed until next year.

Seongsu District 2 panorama. The Asia Business Daily DB.

According to the maintenance industry on the 28th, not a single company participated in the bidding for the construction company selection for District 2, which closed on this day. Just a month ago, a three-way competition was expected among Samsung C&T Construction Division, POSCO E&C, and DL E&C. However, POSCO E&C withdrew, and Samsung C&T decided to focus on District 3, leaving the race. DL E&C, which was expected to submit a sole bid, ultimately did not submit documents either.

The District 2 union recently informed its members, "If multiple construction companies do not participate, we will not proceed with a private contract," and added, "We will adhere to competitive bidding as a principle, even if it takes more time." This is contrary to the recent trend among reconstruction and redevelopment unions to prioritize speed and move toward private contracts. A representative from a construction company commented, "This demonstrates the union's confidence in the business potential of the Seongsu-dong area," and added, "They seem to believe that competitive bidding is the best way to protect the interests of the union members."

A union official also stated, "There is a consensus that competition will result in more favorable terms for union members," and added, "While internal discussions are still necessary, our stance to prioritize competitive bidding is clear." DL E&C explained that, given the union's firm principle and the requirement for a 100 billion won bid deposit to be paid entirely in cash, there was no reason to participate in the bidding. A DL E&C representative said, "With the union having announced that it will not proceed with a private contract, we determined that a sole bid would be meaningless," and added, "With the union's principles being so firm, there is no reason to participate in a competition with no real rivals."

However, due to this failed bidding, it is highly likely that the schedule for selecting a construction company will be pushed back to next year. District 2, with a construction cost of approximately 1.8 trillion won (a total of 2,609 households), had been considered the most lucrative among the Seongsu Strategic Maintenance Zones. However, after an unfortunate incident last month between the union president and a POSCO E&C PR staff member (OS staff), the union president announced plans to voluntarily resign on the 31st, increasing internal instability. Subsequently, the union set a policy that "if the bidding fails, the new executive board will proceed with the construction company selection process without a re-announcement." Some analysts suggest that by delaying the selection, the union may be considering the possibility of Samsung C&T or POSCO E&C, which dropped out early, re-entering the competition.

Some view the union's decision to accept a failed bidding as a 'learning effect' from Seongsu District 1. In District 1, Hyundai Engineering & Construction and HDC Hyundai Development Company did not participate, claiming that the bidding guidelines favored a particular construction company, resulting in GS Engineering & Construction being the sole bidder. As the controversy grew, the union pushed for a re-bid, and some members demanded the dismissal of the union president, leading to internal conflict. As a result, the Seoul Metropolitan Government began an investigation, and the selection of a construction company for District 1 has also been postponed until next year.

The Seongsu Strategic Maintenance Zone is a redevelopment area located in Seongsu-dong, Seongdong-gu, Seoul, and is divided into four districts. If all four districts are developed together, a massive riverside redevelopment complex with about 10,000 households will be created along the Han River. Due to its river views and highly sought-after location, it is often referred to as the 'Banpo of Gangbuk.'