As construction companies strengthen their selective bidding policy, cases of single bidding or no bids being submitted are occurring in Seoul's Gangnam area redevelopment projects. Even in projects where bidding was anticipated, construction companies are showing a passive stance due to issues related to scale and revenue.

An expected perspective view of Gaepo Jugong Complex 6 and 7. /Courtesy of Seoul Urban Maintenance Project.
An expected perspective view of Gaepo Jugong Complex 6 and 7. /Courtesy of Seoul Urban Maintenance Project.

According to the construction industry on the 12th, the reconstruction project of the Gangnam Gaepo Jugong Complex 6 and 7, which closed bidding for contractors on that day, was only bid solely by Hyundai E&C and was therefore rejected. The Gaepo Jugong Complex 6 and 7, with a total construction cost of 1.5319 trillion won, was initially expected to see competition between Samsung C&T and Hyundai E&C, but unlike Hyundai E&C, which showed an active desire for orders, Samsung C&T did not demonstrate a clear intent to bid and thus did not participate. The two companies previously engaged in cutthroat competition over the Hangang District 4 reconstruction early this year.

Samsung C&T, which did not participate in the bidding, has announced plans to focus on securing the reconstruction project of Apgujeong District 2, where a contractor selection meeting is scheduled to take place in September.

In the bidding for the reconstruction contractor of Jamsil Woosung Complex 1, 2, and 3 held on the 4th, a competition between GS Engineering and Construction and Samsung C&T was anticipated, but only GS Engineering and Construction participated, leading to a rejection. Similarly, for the first contractor selection bidding of Bangbae District 15 held on the 27th of last month, only POSCO E&C participated, resulting in a rejection.

In the ongoing redevelopment projects in Seoul, there have been numerous cases where repeated single bidding has been converted to private contracts. The Bongcheon District 14 redevelopment association in Gwanak-gu held a meeting on the 8th and selected GS Engineering and Construction as the contractor after it was the sole participant in the private contract bidding.

In light of this situation, some project associations have changed their bidding conditions. The Sin-dang District 10 association in Jung-gu announced its fourth contractor selection bid on the 7th. The association relaxed previous restrictions on joint bidding (consortium), allowing joint bidding for the fourth bid.

Due to the burden of cutthroat competition exacerbated by an economic downturn, concerns about rejections are emerging in project sites where bids were initially expected. A representative from a major construction company stated, "Most project sites typically have construction companies that are more committed and have competitive advantages in sales. In such cases, given the recent economic downturn and rising construction costs, companies are more likely to choose to withdraw from competition and target other projects rather than compete." They added, "With limited budgets, it is inevitable that the trend of selective bidding will become stronger as companies seek to secure projects with good business potential."

Another construction company representative noted, "While it would be ideal to dive into multiple projects and secure all of them, it is realistically impossible. Currently, construction companies are not in good shape and tend to shy away from projects that incur substantial expenses, so successfully maintaining existing projects is crucial." They also pointed out that because rejections are occurring even in the Gangnam area, the trend of selective bidding is likely to worsen in other regions.

The construction industry anticipates competition between Samsung C&T and Hyundai E&C at the Apgujeong District 2 site. For the Seongsu Strategic Redevelopment Area Seongsu 1 District redevelopment project, which will select a contractor by the end of this year, competition between Hyundai E&C and GS Engineering and Construction is expected. These construction companies have indicated that they will wait for the selection process as there is still time before the decision. A representative from a construction company mentioned, "Although there have been many rejections recently in Gangnam, if the site is as highly regarded as Apgujeong District 2 in Seoul, the potential for business is significant, and thus the likelihood of competition is high. However, it is too early to be certain about the bidding at this stage."

Associations have expressed concern that if construction companies win contracts through private agreements without competition, it could adversely affect them. A representative from an apartment complex association currently pursuing a redevelopment project stated, "While our members want a quick progression of the project, they hope that, just like in the case of Hangang District 4, construction companies will compete and present favorable terms." They added, "If there are rejections from single bids, the project will be delayed, and entering into a private contract will limit our options."