Hyundai Construction Acquires 'Largest Redevelopment' Hannam 3 District (Comprehensive)

General Meeting Held on the 21st at COEX, Samseong-dong, Gangnam-gu, Seoul to Select Construction Company for Hannam 3 District
Despite COVID-19, About 2,700 Union Members Attended... Hyundai Selected as Construction Company After Final Vote with Daelim
Gangnam-gu Office: "Violation of Gathering Ban Order... Legal Procedures Will Be Taken"

Yoon Young-jun, Head of the Housing Business Division and Vice President of Hyundai Engineering & Construction, is speaking about his impressions immediately after the results announcement at the contractor general meeting for Hannam 3 District held on the 21st at COEX in Gangnam-gu, Seoul.

[Asia Economy Reporter Onyu Lim] "When Hannam The Hill The Royal is completed, it will become the best apartment in South Korea. We will build an apartment that satisfies all union members." (Yoon Young-jun, Head of Housing Business Division and Vice President of Hyundai Engineering & Construction)

◆Hyundai Engineering & Construction wins 1,409 votes... narrowly defeats Daelim Industrial by 151 votes in runoff= Hyundai Engineering & Construction has outpaced Daelim Industrial and GS Engineering & Construction to secure the construction rights for the largest redevelopment project in Seoul’s Yongsan-gu Hannam 3 District, with a project cost of 7 trillion KRW and construction cost of 2 trillion KRW.

The Hannam 3 District redevelopment union announced on the 21st that Hyundai Engineering & Construction was finally selected as the contractor following a union member vote held at COEX in Samseong-dong, Gangnam-gu, Seoul. As a result, Hannam 3 District will be reborn under the name "Hannam The Hill The Royal," proposed by Hyundai Engineering & Construction.

On the day of the vote, 2,735 of the approximately 3,800 total union members attended and exercised their voting rights. The voting was conducted in two rounds: the first round and the runoff. In the first round, Hyundai Engineering & Construction and Daelim Industrial received 1,167 and 1,060 votes respectively, easily surpassing GS Engineering & Construction’s 457 votes to become the final candidates. In the runoff vote count, Hyundai Engineering & Construction secured 1,409 votes, defeating Daelim Industrial’s 1,258 votes to win the construction rights.

Hannam 3 District is the largest redevelopment project to date, with a project cost reaching 7 trillion KRW. It involves demolishing old houses in the 686 area of Hannam-dong, Yongsan-gu, Seoul, and constructing 197 buildings ranging from six basement floors to 22 above-ground floors, comprising 5,816 households (including 876 rental units) and neighborhood living facilities.

With construction costs reaching 2 trillion KRW and the competition to build a landmark along the northern Han River being fierce, Hyundai Engineering & Construction, Daelim Industrial, and GS Engineering & Construction competed more intensely than ever. Hyundai Engineering & Construction’s win in Hannam 3 District instantly made it the top contractor in cumulative orders this year.

This decision concludes the 10-month-long process of selecting the contractor for Hannam 3 District. The union began the contractor selection process with a public announcement in August last year. However, the Ministry of Land, Infrastructure and Transport and Seoul City invalidated the bids due to excessive competition and referred the matter to prosecutors, resulting in a 10-month delay before the final selection.

Aerial view of The H DH Hannam Royal in Hannam 3 District proposed by Hyundai Construction

◆Hyundai Engineering & Construction captivates union with 'price competitiveness'... "1.5 trillion KRW cheaper than expected construction cost"= Hyundai Engineering & Construction reportedly gained union members’ support across various aspects including price competitiveness, financial stability, and financing conditions. Before the vote, Hyundai Engineering & Construction emphasized price competitiveness during the first and second joint briefing sessions. They proposed an alternative construction cost of 1.7377 trillion KRW, which is 150 billion KRW less than the union’s estimated construction cost of 1.888 trillion KRW. They promised to reduce construction costs while fully adhering to the union’s recommended standards.

Financial stability was also considered an advantage. As of the end of March, Hyundai Engineering & Construction’s cash and cash equivalents stood at 5.4446 trillion KRW, a 26.7% increase from the end of last year. A Hyundai Engineering & Construction official stated, “With a strong credit rating (AA-), there is no need for Housing & Urban Guarantee Corporation (HUG) guarantees when raising project and relocation funds, saving approximately 109 billion KRW in fees.”

Regarding financing conditions, they promised to provide additional funds beyond the basic relocation fund with a loan-to-value (LTV) ratio of up to 40%. This effectively means relocation funds could be covered up to an LTV of 100%. They also prepared 500 billion KRW in project promotion funds to address issues arising during the project such as eviction and tenant resolution, and delays in permits. Additionally, the plan to introduce Hyundai Department Store was cited as a differentiating strategy. Hyundai Engineering & Construction signed a business agreement (MOU) with Hyundai Department Store Group for the Hannam 3 District redevelopment project in October last year.

Members of the Hannam 3 District redevelopment association are leaving immediately after voting at the contractor selection general meeting held on the 21st at COEX in Samseong-dong, Gangnam-gu, Seoul.

◆Gangnam District Office: "Despite assembly ban order due to COVID-19 concerns, the general meeting proceeded... legal action will be taken"= Meanwhile, the Gangnam District Office issued an administrative order banning gatherings at Hannam 3 District due to concerns over COVID-19 spread, but the union proceeded with the general meeting, citing fears of prolonged project delays if the contractor selection was postponed again.

A Gangnam District Office official who visited the general meeting site said, "Since the assembly ban order is currently in effect, legal and procedural actions will be taken not only against the union but also the attending union members." Failure to comply with the assembly ban order may result in a fine of up to 3 million KRW, and if COVID-19 cases occur, claims for damages including treatment and quarantine costs may be pursued.

The union implemented various quarantine measures on-site to minimize COVID-19 spread. Yellow stickers were placed at 1-meter intervals in waiting areas to enforce social distancing. Quarantine staff measured union members’ temperatures, and virus prevention disinfectants were placed throughout the venue. The Central Disaster and Safety Countermeasures Headquarters stated in a briefing that if the Hannam 3 District redevelopment union violates quarantine rules, they will be subject to prosecution.

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