The construction market in non-Gangnam areas of Seoul is becoming increasingly polarized. While the distinction between Gangnam and non-Gangnam areas used to define market dynamics, recent trends show that even within non-Gangnam areas, factors such as proximity to the Han River, educational districts, transportation hubs, and large-scale developments are influencing construction companies' strategies.
According to the construction industry on June 2, major construction firms are competing for contracts in key redevelopment sites in non-Gangnam areas, including the Seongsu Strategic Redevelopment Zone, Mokdong New Town, and Yeouido reconstruction projects. Although these sites are not in Gangnam, their locations along the Han River, large-scale development potential, and prospects for high-priced sales have made them battlegrounds for high-end brands and specialized designs.
The Seongsu Strategic Redevelopment Zone is attracting the most attention. The redevelopment of Seongsu 4 District involves constructing 1,439 residential units across a site of 89,828 square meters in Seongdong-gu, with a total construction cost of approximately 1.36 trillion won. Lotte Construction and Daewoo Engineering & Construction have entered a competitive bidding process after submitting a bid guarantee of 50 billion won. The bidding process faced a setback when it was initially declared invalid, but a re-bidding has reignited competition.
Mokdong New Town is also emerging as one of the largest bidding markets in non-Gangnam areas. All 14 complexes in Mokdong have passed safety inspections, and the designation of the redevelopment zone has been completed. The total scale of the redevelopment is estimated to be around 30 trillion won. Major construction firms, including Hyundai Engineering & Construction, Samsung C&T, GS Engineering & Construction, Daewoo Construction, Lotte Construction, DL E&C, and POSCO E&C, are evaluating their bids for each complex. Complex 6 is projected to have a total construction cost of around 1.2 trillion won, which could serve as a benchmark for negotiations on the overall redevelopment costs in Mokdong.
Yeouido is following a similar trend. The selection process for construction companies for the Sibeom and Mukhwa apartments has intensified the competition for high-end contracts along the Han River. The Sibeom apartments are set for redevelopment with a scale of 2,491 units across 59 to 65 floors, with an estimated construction cost of about 2 trillion won. The Mukhwa apartments are planned for 416 units across 49 floors. Both complexes are expected to see competition among major construction firms due to a ban on joint bidding.
However, not all projects in non-Gangnam areas are attracting interest from construction firms. General redevelopment projects in northern Seoul or those with high construction costs have seen instances where multiple firms attend information sessions but end up with single bids or no bids at all during the actual bidding process. For example, the redevelopment of Jungnim-dong 398 saw eight firms, including POSCO E&C and Lotte Construction, attend the first information session, but only POSCO E&C submitted a bid, resulting in a failed auction.
A similar trend is observed in public redevelopment projects. In the first bidding for the Sin-gil 1 district, Hyundai Construction, POSCO E&C, and Lotte Construction attended the information session, but no firm submitted a bid, leading to a failed auction. In the re-bidding process, Hyundai Construction was the only bidder. The Chungjeongno 1 district also followed a similar path with a single bid from Doosan Construction.
An industry insider noted, "With rising construction costs, financial burdens, and risks of unsold units increasing simultaneously, the criteria for selecting projects have become stricter. In major redevelopment projects in Seoul, participation in information sessions has become more exploratory, while actual bidding is increasingly focused on projects with confirmed profitability."
The industry believes that the redevelopment market in non-Gangnam areas can no longer be simply categorized as 'Gangnam versus non-Gangnam.' Even within non-Gangnam areas, competition exists in locations with proven sales potential, such as along the Han River, near transportation hubs, and in educational districts. However, projects with uncertain profitability or high additional costs for members are finding it difficult to attract bidders.
A representative from a major construction firm stated, "The era of entering projects in Seoul just for the sake of being in Seoul has passed. We must evaluate construction costs, financial conditions, sale prices, and member demands to select only those projects that can yield profitability. While high-profile locations like Seongsu or Mokdong can consider brand effects, we view risks in general redevelopment projects more conservatively."
* This article has been translated by AI.
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