Seongsu District 2 and Mokdong Complex 12 Likely to See Sole Bids... Avoiding Loss-Making Competition [Real Estate AtoZ]

DL E&C Poised for Sole Bid in Seongsu District 2
Four Builders Attend Mokdong Complex 12 Briefing
GS Engineering & Construction Set for Uncontested Entry

Both the Seongsu Strategic Maintenance District 2 and Mokdong New Town Complex 12, considered major redevelopment and reconstruction projects along the Han River Belt, began their contractor selection process on the same day. Although top 10 construction firms in construction capability evaluation attended the on-site briefing sessions at both locations, it is widely believed that the selection will essentially proceed as a single-bid process.

According to the maintenance industry on July 15, the association for the Seongsu District 2 redevelopment and maintenance project held its contractor bidding briefing session at the association office in Seongsu-dong 2-ga, Seongdong-gu, Seoul that afternoon.

On the 15th, a contractor selection briefing was held at the Seongsu Strategic Maintenance District 2 Union Office in Seongsu-dong 2-ga, Seongdong-gu, Seoul. Photo by Lee Ji-eun

The Seongsu District 2 project covers a 131,980-square-meter site in Seongsu 2-ga 1-dong, aiming to build 2,359 apartment units in buildings up to 65 stories high. The total project cost is 1.7864 trillion won, with the construction cost set at approximately 11.6 million won per 3.3 square meters. Among the Seongsu Strategic Maintenance District projects considered major redevelopment opportunities along the Han River Belt, this site stands out for its prime location and strong business viability, attracting significant interest from major construction companies since last year. The association set the bid deposit at 100 billion won (70 billion won in cash, 30 billion won in performance insurance bonds).

At the on-site briefing, two leading bidders, DL E&C and IPARK Hyundai Development Company, were present. However, market observers expect competitive bidding to be unlikely. Six employees from the Urban Regeneration Team in the Housing Division of DL E&C attended, while only one employee from the Urban Regeneration Team at IPARK Hyundai attended. Earlier this year, a newly formed executive team at Samsung C&T, which had shown interest in participating, decided to focus all its resources on Seongsu District 3. As a result, it is now highly likely that DL E&C will become the contractor for Seongsu District 2 through a negotiated private contract.

Mokdong 12 Complex, which also held an on-site briefing session on the same day, is likewise expected to be awarded to GS E&C without competition. The briefing was attended by staff from GS E&C, Daewoo E&C, POSCO E&C, and IPARK Hyundai Development Company.

On the 15th, an on-site briefing session for selecting a construction company was held at the Mokdong 12 Complex Union Office in Yangcheon-gu, Seoul. Photo by Seong-Ah Sim

The Mokdong 12 Complex project plans to develop 2,810 residential units in 43-story buildings, along with shared community facilities, on the area of 326 Sinjeong-dong. The planned construction cost is 1.7888 trillion won, with a per-3.3-square-meter cost of 9.8 million won. The bid deposit is set at 80 billion won (40 billion won in cash, 40 billion won in performance guarantee insurance bonds).

The strong likelihood of a sole bid by GS E&C is due to the contractor selection schedule for the 14 Mokdong New Town complexes being spread out over time. Construction companies have each selected their target complexes in advance and have been promoting themselves there for a long period. This creates an environment where contractors are more likely to divide the projects among themselves rather than enter into a loss-making competition through open bidding.

An industry official said, "For Mokdong Complexes 8 and 11, which were expected to be the only sites with competitive bidding, contractors who had long focused on those projects have recently withdrawn, leaving them essentially open. Except for those two, specific contractors have devoted significant effort to each complex for years, so there is a prevailing atmosphere of avoiding cutthroat bidding."

The increased likelihood of sole bidding at Han River Belt sites is mainly due to the inevitability of excessive competition involving aggressive financial terms if multiple contractors compete. In addition, loan regulations and rising construction costs are increasing the contributions required from association members. According to an official at a major construction company, "The main Han River Belt project sites have higher qualifying criteria for bidders compared to other sites, which restricts competitive bidding. As a result, even among construction companies, there is a focus on selecting and concentrating on specific projects."

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