With the full-scale launch of the third phase new town private participation public housing project, mid-sized construction companies such as Kumho Engineering & Construction, DL Corporation, Dongbu Corporation, and Woobee Construction have successfully won contracts one after another. The private participation public housing project has a low risk and a stable performance, which encourages mid-sized construction companies to actively pursue contracts.
According to the maintenance industry on the 24th, Kumho Engineering & Construction has won contracts for three business sites of the third phase new town private participation public housing projects ordered by Korea Land & Housing Corporation (LH) this year, including the Uiwang, Gunpo, Ansan area (724.7 billion won), the Namyangju Wangsuk area (598.6 billion won), and the Hanam Gyosan area (257 billion won). The total project cost for four sites, including the Gwangmyeong Hakwon area A2 block selected last year, amounts to 1.9 trillion won.
On the 17th, DL Corporation was selected as the preferred negotiator for the Gwangmyeong Siheung S2-4 and S2-6 blocks (532.9 billion won). DL Corporation returned to the public market after about four years since winning contracts for Busan Yongho 6 and Daejeon Cheondong District 1 in 2021.
Dongbu Corporation was also selected as the preferred negotiator for the Uiwang, Gunpo, Ansan S1-1 and S1-3 blocks private participation public housing construction project this month. Dongbu Corporation is also participating in private participation projects such as the Geomam S-3BL and B-1BL, and Pyeongtaek Goddeok A-12, 27, and 65BL.
Woobee Construction also secured the preferred negotiation position for the integrated private participation public housing construction project for the Goyang Changneung S-1 block and the Uijeongbu Legal Town S-2 block, with a project cost of 300 billion won this month.
The private participation public housing project is a public housing supply model in which public institutions such as LH or GH provide land, and private construction companies are responsible for design, construction, and sales. After being pilot-introduced by LH in 2014, the project has continued to be promoted, recently increasing the scale of private participation projects in the third phase new town public land. Last year, LH raised construction costs by 15% to expand private construction company participation.
LH has completed the public announcement for private participation projects this year for a total of 34 blocks with a total of 29,910 households. According to LH, the private participation public housing projects being pursued this year are expected to comprise a total of 27,000 households (with a project cost in the 8 trillion won range). This marks an increase of 3,000 households from last year, while the project cost has risen by approximately 1.6 trillion won.
From the construction companies' perspective, there is less risk as there are no land purchase expenses or initial project cost financing burdens, and stable subscription demand is a strong point. In particular, these dwellings have a price cap applied, and often include private brand names in the complex names, making them highly preferred by actual demanders.
With the construction industry in a downturn, large construction companies are entering public projects, and for a while, mid-sized construction companies' presence in private participation public housing projects was limited. However, as large construction companies have recently shifted their attention back to large-scale private maintenance projects, mid-sized companies are actively stepping up.
A representative from a mid-sized construction company noted, "For construction companies that have been active in existing public ordered projects, the third phase new town projects are appealing due to their large scale and abundant order volume, and private participation public housing can indeed ensure stability, making it a good opportunity." They added, "In particular, with large construction companies occupying most of the private maintenance projects in the metropolitan area, the proportion of public projects has expanded."