The Ministry of Land said on the 16th that among 10 builders selected over the past two years for the contract-type private participation projects by the Korea Land & Housing Corporation (LH), six were large or mid-sized construction companies ranked within the top 30 in construction capability evaluations.
The ministry on this day released reference material for the "Sept. 7 plan to expand dwellings supply" and explained key issues of the "contract-type private participation project," under which LH directly serves as developer on public housing sites and outsources construction to builders.
Earlier, through the Sept. 7 measures, the ministry announced a plan for LH to break ground on 53,000 dwellings by 2030 by not selling land lots in public housing sites in the greater Seoul area and directly carrying out development.
After concerns were raised that the quality of dwellings would decline because private apartments would not be supplied in public housing sites and only contract-type private participation projects would proceed, the ministry issued an explanatory statement.
Addressing the point that large builders would be reluctant to join contract-type private participation projects due to low profitability, the ministry countered, "Of the 17 builders selected for LH's contract-type private participation projects over the past two years, 64.7% (11 companies) are ranked within the top 30 in construction capability evaluations, and 94.1% (16 companies) are within the top 100, showing that first-tier builders still have high participation and interest in contract-type projects."
It added, "Companies selected for current private participation projects are taking part by forming consortia, and many small and medium-sized enterprises are members of those consortia," and explained, "Since last year's call for proposals, we have awarded extra points based on SME equity contributions, doubled the scoring this year, and will continue efforts so large and small builders can grow together."
Among top-10 large builders, Hyundai E&C, Daewoo E&C, DL E&C, and GS Engineering and Construction were confirmed to have participated.
On concerns that lower construction cost estimates would hurt dwellings quality, it explained, "Because private firms put their own brands on the projects and take charge of design and construction, they manage quality in line with brand value, making it possible to secure quality on par with privately sold dwellings."
It continued, "For construction costs, we improved the system in 2023 to allow cost adjustments by reflecting factors such as price fluctuations through completion," adding, "We will continue to hear industry opinions and work to set construction costs at appropriate levels."
On the point that LH's direct execution would reduce private sales and cause confusion among subscription waiters, it said, "In accordance with the Sept. 7 measures, LH's direct execution, which is being pushed forward swiftly, will be implemented in parallel with reforms to related systems such as subscriptions," adding, "The LH Reform Committee currently in operation will prepare comprehensive system improvement measures related to LH's direct execution after sufficient discussion. In addition, future improvements to be discussed are unrelated to business sites where procedures such as recruiting occupants are already underway, and we will proactively explain to prevent confusion among subscription waiters."