Mok-dong Reconstruction to Select Construction Companies Early Next Year... Possibility of Divided Bidding [Real Estate AtoZ]

Complex 6 to Announce Tender at End of January, Complex 13 in March
Complexes 8 and 12 to Establish Associations Early Next Year

Among the 14 apartment complexes in Mok-dong, Seoul, that are set for reconstruction, some will begin the process of selecting construction companies early next year. Some analysts predict that, rather than fierce competition for contracts, there is a high likelihood that the bidding process will be divided among major players.

Mok-dong Complexes 6 and 13 to Select Construction Companies Early Next Year

According to the maintenance industry on December 10, the reconstruction association for Mok-dong Complex 6 plans to announce a tender for construction companies at the end of January next year and select a contractor within the first half of the year. Complex 6 was the first among the 14 Mok-dong reconstruction apartment complexes to complete the formation of its association, which was finalized this past May. An official from the Complex 6 association stated, "We are currently reviewing the bidding plan with the goal of holding a general meeting to select the construction company around May next year," adding, "We are also working in parallel on preparations for an integrated review in the first half of the same year."

Mok-dong Complex 13, which received official designation as the project implementer through a trust-based method in October, will complete the selection of a design firm this month. The announcement for construction company selection is scheduled for March next year.

A representative from the Complex 13 preparatory committee said, "After completing the general meeting to select the design firm, we will proceed as quickly as possible with the process of selecting the construction company," adding, "We plan to announce the tender in March next year and aim to obtain the management disposition approval within three years."

In addition to Complex 6, five other complexes (Complexes 5, 9, 10, 13, and 14) have either completed association formation or received official project implementer designation (trust-based method). Complexes 3, 4, 8, and 12 have either received or applied for preparatory committee approval, with Complexes 8 and 12 close to forming their associations. To establish an association, at least 70% of landowners and 50% consent from each building must be secured.

Complexes 8 and 12 to Form Associations Early Next Year

Complex 12 will hold a general meeting to establish its association at the end of January next year, just four months after the preparatory committee received approval in September. The required consent rate for association formation has already been secured. A representative from the Complex 12 preparatory committee said, "We have completed negotiations with commercial tenants and plan to finish collecting consent forms this week," adding, "After designating a design firm at the general meeting, we will proceed with selecting a construction company with the goal of completing it in the first half of next year."

Mok-dong Complex 8 will hold its general meeting to form the association in early February next year. Afterward, the process will move forward with a design firm bidding announcement and integrated review, followed by the selection of a construction company. A representative from the Complex 8 preparatory committee explained, "We have secured a 77.5% resident consent rate and only need to meet the consent rate from commercial tenants," adding, "We expect to be able to announce the construction company tender around June or July next year."

Complexes 1, 2, 7, and 11 have completed the official designation of the maintenance area. Complex 7, which is proceeding with the association method, is preparing to establish a preparatory committee with public support.

Strong Resident Will and High Profitability... Construction Companies Preparing to Bid

The 14 Mok-dong complexes have a floor area ratio in the low to mid-100% range, boast strong school districts, and comprise approximately 26,000 households, making the projects highly profitable. Construction companies are showing interest in winning these contracts and are actively promoting themselves. Samsung C&T is reportedly interested in Complex 13, while DL E&C is eyeing Complex 6.

Because the schedules for selecting construction companies are staggered, there is a greater likelihood of 'divided bidding' rather than cutthroat competition. An industry official commented, "There is a sense that the top 10 construction companies are trying to avoid competitive bidding," adding, "With many areas such as Apgujeong and Seongsu also set to select construction companies next year, it is questionable whether a competitive landscape will actually emerge."

Meanwhile, following the real estate policy announcement on October 10 and 15, it is no longer possible to transfer association membership status in reconstruction complexes that have completed association formation (or official project implementer designation). Currently, transactions are active in complexes that have not yet formed associations. For example, a 95-square-meter unit in Complex 2 was sold for 2.75 billion won on December 5. In Complex 1, a 47-square-meter unit was sold for 1.88 billion won on November 17, and a 66-square-meter unit set a new record at 2.41 billion won.