Reconstruction Bidding Kicks Off in Mok-dong for 47,000 New Households... All Eyes on Contractors' Strategic Maneuvering [Real Estate AtoZ]

Bidding Closes on April 10
Ten Firms Including DL E&C and Daewoo Take Part
Selective Bidding Likely as Firms Seek to Avoid Cutthroat Competition

The process of selecting a construction company for the reconstruction project has begun at Complex 6 of Mok-dong in Yangcheon-gu, Seoul. Mok-dong New Town is one of the representative residential complexes in the southwestern part of Seoul and, once the redevelopment projects are completed, is expected to become one of the largest project sites in the city. As this is the first construction company selection in the Mok-dong reconstruction projects, intense maneuvering among builders is anticipated.

According to explanations from the maintenance and redevelopment industry, a total of 10 companies, including DL E&C, Samsung C&T, POSCO E&C, Daewoo Engineering & Construction, Hyundai Engineering & Construction, and SK Ecoplant, attended the on-site briefing session for the selection of a construction company for the Mok-dong Complex 6 reconstruction held on the 23rd. The association requested alternative design proposals from the construction companies that attended the briefing. Within a construction cost range of about 81 billion won, it plans to expand community facilities (2.5 pyeong per household) and underground parking (2 spaces per household). The bidding deadline is April 10, and the association plans to hold a general meeting to select the construction company on May 30.

Attention was drawn to the presence of Samsung C&T and Hyundai Engineering & Construction at the briefing session, as both companies are known to have shown interest in other complexes within Mok-dong New Town. Daewoo Engineering & Construction, which had not carried out noticeable promotional activities in the area so far, also attracted interest as three of its employees appeared at the event. Two employees from DL E&C, known to be the most active regarding Complex 6, also attended the briefing, signaling a strong intention to win the project.

Construction companies are interested in Mok-dong Complex 6 because the project is highly profitable and can proceed quickly. The floor area ratio of Mok-dong Complex 6 is 139.08%, which is relatively low compared to surrounding complexes. Nearby are Ewha Mokdong Hospital, Gyeongin Elementary School, and Yangjeong Middle and High Schools, providing favorable school districts and medical infrastructure. Depending on the design, some units higher than 30 floors are expected to have views of the Han River. The complex is also expected to benefit from the development of Mokdong Stadium and the stormwater retention basin. Without forming a promotion committee, Complex 6 adopted a "direct association establishment" method and succeeded in establishing the association just nine months after the area was designated as a maintenance zone.

Although many construction companies participated in the on-site briefing session, some voices say it is difficult to predict a fully competitive bidding process. Since large-scale construction company selections are underway this year at major redevelopment sites in central Seoul such as Seongsu and Apgujeong, there are projections that, across the 14 complexes in Mok-dong, construction companies will avoid cutthroat competition and instead pursue a strategy of dividing the bids among themselves.

An industry source said, "Construction companies have already informally divided up which complexes they will target and are competing behind the scenes," adding, "For Complex 6, DL E&C is taking the lead; Samsung C&T is focusing on Complexes 1, 3, and 5; GS Engineering & Construction is eyeing Complex 12; and Hyundai Engineering & Construction is concentrating on Complexes 7, 10, and 14."

Depending on the outcome of the bidding for Complex 6, which will be the first to go through the construction company tender process, the competitive landscape for the other complexes is expected to be shaped. This year, starting with Complex 6, Complexes 8, 12, and 13 are also expected to proceed with construction company bidding. A representative from one of the associations within Mok-dong New Town predicted, "Until it becomes clear which construction company will participate in the bidding for which complex, the builders will continue to jockey for position and engage in intense strategic maneuvering over the competitive structure."

Meanwhile, all 14 complexes in Mok-dong New Town completed their maintenance zone designations last year and are scheduled to begin construction in phases through 2031. Among the 14 complexes, a total of 7 (Complex 6 (association established), and Complexes 5, 9, 10, 11, 13, and 14) have either established an association or received public notice designating a project implementer. Complexes 3, 4, 8, and 12 have either obtained or applied for promotion committee approval, and among them, Complexes 8 and 12 recently held their inaugural general meetings to establish associations. Once the reconstruction of all 14 complexes is completed, the area is expected to be transformed into a large-scale, new-town-level residential district with a total of 47,438 households.