Bidding battles among major builders are disappearing at core redevelopment sites in Seoul. Seongsu District 2, where the estimated construction cost reaches 2 trillion won, and Mok-dong Complex 12, valued at 1.8 trillion won, each drew a single bidder and were both declared void. As construction costs and financing expenses rise, builders are turning to "selective bidding," weighing profitability and the likelihood of winning rather than chasing scale. Some worry that unions' choices and bargaining power are weakening and that re-bidding could delay project timelines.
According to the maintenance industry on Dec. 3, only DL E&C took part in the first bidding to select a contractor for the redevelopment of Seoul Seongdong District Seongsu Strategic Maintenance Zone District 2, which closed on Nov. 31. In July, DL E&C and IPARK Hyundai Development Company attended the site briefing, raising the prospect of a two-way race, but IPARK Hyundai Development Company did not join the main bid.
Seongsu District 2 is a redevelopment project to build up to 65 stories with 2,381 households. The estimated construction cost is about 2.0137 trillion won. The union plans to go through a second bid and select a contractor within the year.
Under the current Urban Maintenance Act, competitive bidding does not stand unless at least two companies participate in the bid to select a contractor. If the bid fails twice or more due to reasons such as a single bid, the union may select a contractor through a negotiated contract with a general meeting resolution.
Mok-dong Complex 12 in Yangcheon District, Seoul, which closed bidding the same day, also was voided after only GS Engineering & Construction bid. Although four companies—GS Engineering & Construction, Daewoo Engineering & Construction, POSCO E&C, and IPARK Hyundai Development Company—attended the site briefing in July, only GS Engineering & Construction entered the actual bid.
Mok-dong Complex 12 is a reconstruction project to increase the existing 1,860 households to 2,810 in buildings up to 43 stories. The estimated construction cost is 1.7888 trillion won, and the bid bond alone is 80 billion won. With all 14 complexes in the Mok-dong New Town moving to select contractors in succession, some say builders find it hard to bid on multiple projects at the same time.
Apgujeong and Yeouido show similar trends. As of Nov. 10, only three of the 25 maintenance sites in Seoul where the top 10 builders by construction capability secured construction rights saw multiple builders face off: Apgujeong District 5, Shinbanpo 19 and 25, and Seongsu District 4. That is about 12% of the total.
Only Hyundai Engineering & Construction bid for Apgujeong District 3, where the estimated construction cost reaches 5.561 trillion won. Only Samsung C&T took part in Shibeom Apartments, considered the largest reconstruction project in Yeouido with a total project cost of about 2 trillion won. Seven builders attended the Shibeom Apartments site briefing, but all dropped out before the main bid.
To participate in bidding, a builder must prepare hundreds of billions of won in bonds and spend on specialized design, financing support plans, and promotion. If it loses the competition, much of that becomes hard-to-recover expense. With raw material prices and labor costs up and the burden of raising project funds growing, companies have settled into avoiding projects where the chances of winning are uncertain.
A large builder official said, "When multiple complexes like Mok-dong go to bid at once, we need several hundred billion won just for bonds," adding, "With dwellings business revenue squeezed, it is hard to enter every establishment while absorbing losses."
More single bids let builders avoid cutthroat competition, but put unions at a disadvantage. That is because it is hard to compare multiple companies' construction costs, specialized designs, finishes, and project financing terms. Because a negotiated contract is allowed only after two failed bids, the timeline to select a contractor is also pushed back.
The government's Aug. 13 dwellings rapid-supply plan includes streamlining re-bidding procedures when bidding is voided due to a single bid. The aim is to speed up projects. Still, some note that if competition thins further, unions' leverage on price and design could weaken, calling for supplementary measures.