After two unsuccessful bid attempts, the tram project in Dongtan New Town, Hwaseong, has adjusted its construction costs and is now in the process of selecting a business operator again. However, the construction industry remains hesitant to participate due to low construction costs. Concerns have been raised that this could negatively impact the nearby real estate market.
On the 6th, according to the construction and engineering industry, Hwaseong City requested a contract for the 'Dongtan Urban Railway Construction Project (Phase 1)' to the Public Procurement Service on the 31st of last month. The Public Procurement Service plans to announce the third business operator selection after reviewing it for about a week.
The Dongtan tram project connects from Shinandong, Hwaseong, to Jangjidong and Suwon's Yeongtongdong, as well as areas around Banggyo-dong in Hwaseong, covering 31.55 km (33 stations). It is divided into sections from Byeongjeom Station in Hwaseong to Dongtan Station (17.82 km) and from Mangpo Station in Suwon's Yeongtong District to Banggyo-dong (13.73 km). Although the Dongtan tram was finalized as part of the metropolitan traffic improvement measures in 2009, it has struggled to gain momentum for 15 years without selecting a business operator. Last year's expected opening date was also delayed from 2027 to 2028.
Trams can be developed more quickly than subways and, unlike subways and light rail, operate on tracks installed above ground, raising expectations that visitor and flow populations will increase around stations and routes.
Previously, the Dongtan tram issued its first business operator selection announcement in April and a second announcement in May, but no construction companies participated, resulting in both being unsuccessful. It is known that some construction firms, including DL E&C and TAEYOUNG E&C, which initially struggled with the idea of participating in a consortium, decided to withdraw their bids.
After two unsuccessful bids, Hwaseong City conducted a construction cost adjustment process. From June 25 to about a month, it implemented a 'Basic Design Cost Calculation Service for the Dongtan Urban Railway Construction Project (Phase 1)' through the Korea Construction Management Institute. As a result, the construction cost was increased by 11.8%, from 611.4 billion won to 683.4 billion won.
Despite the increase in construction costs, the construction industry remains hesitant to participate, citing that costs are still too low. A representative from a large construction company noted, "While there have been efforts to normalize construction costs for projects ordered by the government or local governments, it is still difficult to meet the amounts that construction firms desire," adding, "They are observing the increased costs but are not actively participating. Other construction companies likely feel similarly."
Another construction company representative mentioned, "Trams are not a common project in Korea, which creates unique challenges in terms of materials. While the difficulty of construction is not particularly high, there are certainly burdens involved," and added, "Moreover, recent light rail and tram projects have shown limited demand, leading to negative public sentiment, which also impacts this situation."
Residents of Hwaseong believe that the project should proceed swiftly as the premiums were calculated based on local transport improvement contributions included in the sale prices during the creation of the Dongtan 2 New Town. Once the route operates, it will become more convenient for residents near Dongtan Lake Park to travel to Dongtan Station via the Metropolitan Rapid Transit (GTX)-A line, but they worry that the longer the opening is delayed, the more dissatisfaction there will be among residents who contributed.
A real estate agent near Dongtan Station stated, "Residents near Dongtan Station do not feel a significant need for the tram as they use the GTX, but residents on the outskirts of the new town who find the GTX hard to access by walking, despite having paid their contributions, may have complaints due to the transportation inconvenience."
The real estate market near Dongtan has reportedly shown little reaction to the tram's unsuccessful bids, as transportation benefits have already been factored in. A representative from a real estate agency near Dongtan Station explained, "The transportation infrastructure benefits related to trams seem to have already been priced in. Currently, the market is stagnant due to the impact of the June 27 measures," adding, "Even if a construction company is selected, the expectations for price increases do not seem very high."
There are also reactions expressing concerns about the negative impact on the real estate market. A representative from a real estate agency near Dongtan Station remarked, "Even if the transportation benefits have been factored in, if the project continues to be unsuccessful and delays the opening, it is unlikely to have a positive effect on the market."