Will the Two-Way Contest in Noryangjin 1 District Change?...Posco E&C Gains Momentum

by Roh Kyungjo

Published 02 Feb.2024 12:05(KST)

Samsung C&T and POSCO E&C, who recently competed in the Busan redevelopment project bidding war, are preparing to face off again in Noryangjin, Dongjak-gu, Seoul. Noryangjin 1 District was originally expected to be a two-way contest between Samsung C&T and GS Engineering & Construction. However, after the selection of the construction company was postponed once due to issues such as increased construction costs and pre-promotion, the dynamics seem to be changing.

View of the Noryangjin redevelopment site from the observatory of the 63 Building in Yeouido, Seoul. / Photo by Hyunmin Kim kimhyun81@

According to the redevelopment industry on the 2nd, the Noryangjin 1 District redevelopment association will close the bidding for the selection of the construction company (second round) on the 15th of this month. Although seven construction companies gathered at the first site briefing held in September last year, no one participated in the November bidding. Then, six companies including Samsung C&T, GS Engineering & Construction, POSCO E&C, Hoban Construction, Kumho Construction, and Hyosung Heavy Industries attended the second site briefing held in December. Compared to the first round, Hyundai Engineering & Construction and Hyundai Engineering were absent, while Hyosung Heavy Industries joined.

Among them, GS Engineering & Construction has been working on this project for a long time. However, GS Engineering & Construction has been cautious after receiving two warnings from the association for violating promotional regulations in the bidding guidelines in September and October last year. The association also considers problematic the recent suspension of business orders from the Ministry of Land, Infrastructure and Transport and Seoul City related to the underground parking lot collapse accident at the apartment construction site in Geomdan New Town, Incheon, last year.

In this situation, the industry is highly expecting Samsung C&T and POSCO E&C to participate in the bidding. POSCO E&C is actively pursuing the Noryangjin 1 District project, riding the momentum from winning the redevelopment project in Chokjin 2-1 District, Busanjin-gu. A POSCO E&C official said, "We are positively considering whether to participate in the bidding."

Previously, POSCO E&C competed with Samsung C&T in Chokjin 2-1 District, applying the high-end brand 'Otier' for the first time in the provinces while emphasizing relatively low construction costs as a strength. This strategy ultimately worked. Noryangjin 1 District is known as a place where the gap between the association and the construction company over construction costs is particularly large. Construction companies point out that the construction cost set by the association (7.3 million KRW per 3.3㎡) is too low compared to inflation.

Samsung C&T is also reviewing whether to participate in the bidding as it is an opportunity to take the first step into Noryangjin New Town. Samsung C&T has focused on Noryangjin 1 District without participating in the Yeouido Hanyang Apartment reconstruction bidding, which is geographically adjacent, last year. A Samsung C&T official said, "It is regrettable that there was no change in construction costs in the re-bidding, but we are comprehensively reviewing the bidding conditions."

Currently, Noryangjin 1 District is the only area in Noryangjin New Town where the construction company has not been decided. From District 2 to District 8, SK Ecoplant, POSCO E&C, Hyundai Engineering & Construction, Daewoo Engineering & Construction, GS Engineering & Construction, and DL E&C have taken charge of construction either individually or jointly.