DL E&C has recently been offering striking terms to redevelopment and reconstruction associations in the dwellings rehabilitation institutional sector. It proposed construction costs lower than the associations' estimates, and even pledged to pay members compensation of 30 million won per household if groundbreaking is delayed. No builder had attached such terms until now. In particular, since DL Group, which includes DL E&C, has been known in the industry for not aggressively pursuing rehabilitation project orders, DL E&C's recent moves are all the more unusual.
According to the rehabilitation industry on the 6th, DL E&C sent an official letter to the Seongnam Sangdaewon District 2 reconstruction association in Gyeonggi, saying it would compensate members 30 million won per household if groundbreaking does not occur by June. Sangdaewon District 2 covers 242,000 square meters around 3910 Sangdaewon-dong, Seongnam, and the project will build up to 29 stories above ground in 43 buildings with 4,885 households; demolition has been completed. DL E&C also promised to fully arrange 200 billion won in project acceleration funds and to support the shares (down payments and interim payments) of members who own multiple dwellings. It additionally proposed extending the payment deadline so that the extra shares, typically settled in full at move-in, can be paid one year after move-in. Industry watchers say, "While competition among builders is often intense at large business sites, it is unusual to go as far as pledging compensation."
Sangdaewon District 2 is where GS Engineering & Construction and DL E&C are locked in a fierce battle for the builder position. The association sought to replace the existing builder, DL E&C, with GS Engineering & Construction, but DL E&C filed for a court injunction to suspend the effect of the "notice of termination of the construction contract," and the court granted it, narrowly maintaining its builder status. However, the possibility of switching the builder to GS Engineering & Construction remains open.
Earlier, DL E&C won the project in 2015 and signed a contract with the association in 2021. However, DL E&C clashed with the association over construction costs and the application of the high-end brand "ACRO," and this conflict led to a push to replace the builder. A DL Group official said, "We have waited more than 10 years since winning the order, and with groundbreaking now in sight, we are at a stage where about 500 billion won in annual revenue would be booked, yet we are about to be stripped of the builder status. We cannot allow this, so we are actively working to persuade members."
DL E&C is also aggressively bidding for the Apgujeong District 5 reconstruction project in Gangnam-gu, Seoul. DL E&C proposed construction costs of 11.39 million won per 3.3 square meters for District 5, about 1 million won lower than the association's estimate. The project will rebuild the Hanyang 1 and 2 apartments around 490 Apgujeong-dong, Gangnam-gu, planning eight buildings from five basement levels to more than 60 stories above ground, with 1,397 households.
The project cost is about 1.496 trillion won, and on the 30th the association's general meeting will select a builder between Hyundai Engineering & Construction and DL E&C. DL E&C pledged to cover the entire construction cost of the retail facilities, which will total about 5,060 pyeong, and to take responsibility for the sale in collaboration with a global company specializing in commercial property dispositions. The proposal reflects that there are no association members for the retail portion and thus no party to share the retail construction cost. DL E&C also said it would directly purchase any unsold units in the apartments and retail under terms favorable to the association.
DL Group, which includes DL E&C, is known in the construction industry for taking a very cautious approach to rehabilitation project orders. It avoids forcing unprofitable projects or overusing high-end brands and pursues a strategy of not bidding at all unless the site is a prime asset. A rehabilitation industry official said, "At the group level, they tried not to hang the high-end brand ACRO on rehabilitation business sites and maintained cautious bidding," adding, "In the process, manpower and expense reductions in the rehabilitation field also continued, and some staff moved to competitors such as Samsung C&T or GS Engineering & Construction."
Many analysts say DL E&C's decision to offer compensation for delayed groundbreaking and even commit to directly acquiring unsold units in pursuit of rehabilitation orders stems from a sense of crisis that its future pipeline could dry up if it keeps losing trillion-won-class mega projects. That is because builders touting high-end brands—such as Samsung C&T, Hyundai Engineering & Construction, and GS Engineering & Construction—are taking most of the key areas in Seoul, including Gangnam, Yeouido, Mok-dong, and Seongsu.
As of the first quarter this year, DL E&C's domestic dwellings institutional sector revenue was 928.1 billion won, remaining in the low-900-billion-won range after 924.3 billion won in the fourth quarter last year. DL E&C's domestic dwellings institutional sector revenue topped 1 trillion won every quarter in 2024 and stayed in the high-900-billion-won to over-1-trillion-won range in the first to third quarters last year, but it has been declining since the fourth quarter last year. Song Seung-hyeon, head of Urban and Economy, said, "The tilt toward large companies in rehabilitation projects is more severe than ever. In this situation, without aggressive marketing, there is no way to generate performance or revenue, so DL E&C has no choice but to propose bold terms."