In the Apgujeong-dong apartment complex in Gangnam-gu, Seoul, a large-scale lawsuit is anticipated between Hyundai E&C and the reconstruction association, raising concerns in the construction industry that Hyundai E&C's plans to seize all construction rights in the Apgujeong area's reconstruction market may face setbacks. This is due to the fact that Hyundai E&C must engage in a lawsuit worth trillions of won over land ownership issues, which could spread distrust among the association members towards the company.
Currently, the reconstruction of Apgujeong Hyundai Apartments (including Miseong and Hanyang) is being carried out in a total of six districts. Competition to build new apartments on 849,707.3 square meters extending from Hanam Bridge through Dongho and Seongsu Bridges to Galleria Department Store is heating up.
According to the rehabilitation industry on the 18th, Hyundai E&C still has its name registered on land valued at over 2 trillion won because they did not manage land equity during the development process in the 1970s, specifically in the Apgujeong District 3. This area, comprising 3,946 households and 361,878 square meters, is centrally located among the six districts and also boasts the largest area. An industry insider noted, 'District 3 is the most desired area among Hyundai E&C and other large construction companies like Samsung C&T, but the occurrence of a lawsuit against Hyundai has introduced uncertainty.'
According to industry insiders, Hyundai E&C and Samsung C&T have long sought to win the contract for District 3. They have developed bid strategies centered around the site. However, contrary to expectations, the District 2 association, which includes New Hyundai 9, 11, and 12, announced the selection of a construction company first, disrupting the companies' plans. While they must secure District 3, they cannot afford to give up District 2 either; thus, upon the announcement of the construction company selection for District 2 on June 18, Hyundai E&C and Samsung C&T stated they would participate in the bidding. However, two days after declaring their participation in the District 2 bidding, on June 20, Samsung C&T announced it was withdrawing from the project.
On the surface, it was stated that Samsung C&T found it difficult to meet the bid conditions, but there is a prevalent opinion in the industry that this was a strategic choice to relinquish District 2 to Hyundai E&C in order to secure District 3. Amid this, significant adverse developments affecting Hyundai E&C occurred in District 3.
District 2, where Hyundai E&C is likely to be the sole bidder, also faces the possibility of competition from other construction companies. According to the 'District 2 Apgujeong construction company selection bid announcement,' the association will accept bid proposals until August 11 and plans to select a contractor in September. With trust in Hyundai E&C shaken, almost a month remains in the bid proposal submission period. Although Samsung C&T has withdrawn from the process and Hyundai E&C is expected to acquire the construction rights smoothly after investing significant time in the bid, first-class construction companies involved in the rehabilitation business, such as GS Engineering and Construction, DL E&C, and Daewoo E&C, may challenge Hyundai.
Apgujeong District 2 is set to undergo reconstruction from its scale of 1,924 households across 27 buildings to a projected maximum of 2,571 households in 14 buildings up to 65 stories high. In relation to this, a real estate agency official in District 2 stated, 'There are currently no reports that other construction companies will participate in the construction bid.'
In addition to Districts 3 and 2, the chances of Hyundai E&C maintaining its dominance may also be shaken in Districts 1, 4, 5, and 6. With well-known brands such as Raemian, JAI, Acro, and Summit present, there is no need to insist on the name Hyundai. An industry insider remarked, 'Many association members prefer the Hyundai brand in Apgujeong, but there are also many who question whether Hyundai E&C must construct it again, given that it became known how poorly Hyundai E&C handled the work at the time of development; the opinion that other construction companies should be considered is likely to grow.'
Lee Eun-hyung, a researcher at the Korea Construction Policy Research Institute, stated, 'Large construction companies often secure contracts at business sites with improved conditions even after having caused serious accidents. It cannot be definitively said that Hyundai E&C will not win contracts in the Apgujeong area due to this lawsuit.' The researcher added, 'However, in a competitive environment with similar bid conditions, a decline in the company's credibility can have some impact.'
Meanwhile, Hyundai E&C applied to the Korean Intellectual Property Office in February for trademark rights to the name 'Apgujeong Hyundai' for the apartment complex. The Korean Intellectual Property Office is currently reviewing this application. An official from the office noted, 'The outcome of the application under review cannot be anticipated.'