Construction Cost of 2.8 Trillion Won... Intense Competition Among Construction Companies in the Hangang War

[Asia Economy Reporter Yuri Kim] Starting next week, the bidding war for reconstruction and redevelopment projects that will change the residential map along the Han River in Seoul will intensify. At the end of this month, the contractors for Sinbanpo 21st Complex in Jamwon-dong, Seocho-gu, and Banpo-dong Jugong 1st Complex 3rd District (Banpo 3rd District) will be finalized, followed by the contractor decision for Hannam 3rd District in Hannam-dong, Yongsan-gu at the end of next month. The total construction cost for these three redevelopment projects amounts to 2.7987 trillion KRW, and the outcomes are expected to influence future major project bids, leading to fierce last-minute competition among companies.

◆ Sinbanpo 21st Complex, GS Construction's 'Xi Town' vs POSCO Construction's 'Reduced Financial Burden' = The bidding competition opens with Sinbanpo 21st Complex. The contractor selection general meeting will be held on the 28th. The project involves reconstructing two buildings from 108 households to 275 households in two buildings. Although the project scale is small, it is a prime location adjacent to Banpo Station on Subway Line 7. GS Construction and POSCO Construction, both participating in the bid, have respectively proposed 'Xi Town' and 'Reducing the financial burden on the union.' GS Construction emphasized creating a Xi Town with 7,370 households linked to Banpo Xi (3,410 households) and Sinbanpo 4 District (3,685 households). They also adopted the 'Prime Time Sale System,' allowing general sales at desired times during construction after groundbreaking. The system also supports post-sale. POSCO Construction presented a pure post-sale option with no financial burden on union members. They also offered a debt-for-property settlement option. Under the post-sale system, if the sale price rises and unsold units occur in the general sale portion, the construction company will bear the loss.

◆ Banpo 3rd District, Samsung C&T's Shortened Construction Period vs Daewoo E&C's Radical Interest Rate = Banpo 3rd District, with a construction cost of 808.7 billion KRW, will decide its contractor on the 30th. As a large-scale project creating 2,091 households in the heart of Banpo, the industry’s attention is focused on the contractor selection results. Therefore, Samsung C&T and Daewoo Engineering & Construction, participating in the bid, have been making groundbreaking proposals daily regarding financial conditions, landscaping, and design. Samsung C&T emphasized rapid progress, including post-sale and applying for management disposition approval within three months after signing the construction contract. They also proposed ▲ creating a 20,000㎡ natural forest ▲ introducing an Internet of Things (IoT) platform in collaboration with Samsung Electronics ▲ design collaboration with renowned overseas firms. Daewoo E&C proposed a choice between pre-sale and post-sale. They also offered a radical financing condition with an interest rate of 0.9%. On the 13th, Daewoo E&C President Kim Hyung personally visited the union office, promising to strictly adhere to the bid proposal and contract terms. Additionally, Daewoo E&C proposed ▲ complex design and landscaping in collaboration with famous overseas architects and designers ▲ application of an air purification system blocking harmful viruses ▲ introduction of a management cost reduction system.

◆ Hannam 3rd District, the Rematch of Hyundai, GS, and Daelim = Hannam 3rd District, considered this year’s largest redevelopment project, is a mega project constructing 22-story buildings, 197 buildings, and 5,816 households. The total project cost is 7 trillion KRW, with construction costs alone reaching 1.888 trillion KRW. Since winning this project will decisively impact this year’s performance, the three major companies participating in the bid?Hyundai Construction, GS Construction, and Daelim Industrial?are preparing for an all-out battle. Last year’s contractor selection saw overheated competition, leading to a Ministry of Land, Infrastructure and Transport field investigation and a request for investigation of the three bidding companies by Seoul City, causing some controversy. However, the prosecution cleared the bidding construction companies of charges, allowing these three companies to rematch. Each company is expected to differentiate itself by minimizing the impact of the price ceiling system and adjusting the ratio of redevelopment rental housing, while carefully navigating government and Seoul City restrictions. The union plans to disclose the three companies’ bid proposals on the 18th, hold the first joint briefing session on the 3rd of next month, and the contractor selection general meeting on the 20th of next month.

This content was produced with the assistance of AI translation services.