HDC Hyundai Development Company is reported to have offered unprecedented conditions that exceed competitive bidding levels in the 'Bangbae Sin Samho Reconstruction Maintenance Project,' which is conducted through a negotiated contract. This is considered a very unusual case when considering the industry practice that competitive bidding tends to offer better terms than negotiated contracts.
The Bangbae Sin Samho reconstruction project transitioned to a negotiated contract procedure after two rounds of failure on May 9 and May 22, and HDC Hyundai Development Company, which submitted a sole bid for all tenders on May 23, was selected as the preferred bidder.
The proposal for the negotiated contract submitted by HDC Hyundai Development Company includes unprecedented conditions such as ▲ construction cost of 8.76 million won per 3.3㎡ ▲ a two-year deferral on construction costs ▲ project cost of CD+0.1% ▲ 100% payment of contributions upon occupancy ▲ early payment of refunds ▲ and 200 billion won for project promotion.
The construction cost per 3.3㎡ proposed by HDC Hyundai Development Company is 8.76 million won, which is about 700,000 won cheaper than nearby Shin Banpo 2nd (9.49 million won) and Shin Banpo 4th (9.27 million won), major reconstruction complexes in Gangnam.
In particular, the condition of 'deferring construction costs for two years,' which is rarely seen even in competitive bidding, was included. Due to a revision of the Seoul city ordinance, the selection of constructors for maintenance projects has recently changed to after the establishment of the association, with an average of over two years required for permits. Considering this, the deferral of construction costs can provide the association with substantial benefits in the hundreds of billions of won in terms of project cost savings. This contrasts with most projects in Gangnam conducted through negotiated contracts that applied inflation adjustments simultaneously with bidding.
The project cost conditions are also at their lowest level ever. The project financing interest rate of the negotiable certificate of deposit (CD) rate +0.1% is lower than that of DL E&C (CD+0.9%), which was conducted through a negotiated contract, as well as Samsung C&T (CD+0.78%), which was chosen as a contractor through competitive bidding for the Hannam 4th district.
Additionally, HDC Hyundai Development Company proposed alternative designs to dramatically enhance project viability. They suggested increasing the number of new housing units by 30 compared to the original plan and adding eight penthouses aimed at premium demand, along with securing 125 units with views of the Han River. The units with views are expected to have a premium of over 1 billion won each, making them a key factor in increasing the project's sales income and symbolic significance.
The conditions aimed at reducing the initial financial burden on association members are also notable. Full payment of contributions upon occupancy and the proposal of 200 billion won for project promotion are designed to minimize the financial burden on the association and enhance the speed of project advancement.
An official from the maintenance industry noted, 'It is very unusual for more favorable conditions to be presented than competitive bidding, despite it being a negotiated contract,' adding, 'This demonstrates the strong will of HDC Hyundai Development Company to secure the Bangbae Sin Samho project and could influence other forthcoming maintenance projects.'
Meanwhile, HDC Hyundai Development Company is in the process of deploying its vision to transform the Bangbae Sin Samho complex into a local landmark, applying the premium alternative design 'THE SQUARE 270' and gradually unveiling a 'luxury master plan' that reflects differentiated viewing features and community strategies.