The competitive bidding landscape among construction companies in Seoul's redevelopment market has become increasingly subdued. However, the competition for contracts has not disappeared entirely. As construction and financing costs rise, companies are shifting their strategies from direct confrontations at bidding sites to identifying high-potential projects and securing member support months in advance.
In recent bids, single bids have become common, while major construction firms are establishing brand lounges around the project sites, leading to a heated 'off-site bidding war.' Mokdong New Town, valued at approximately 30 trillion won, is a prime example.
According to the construction industry on September 10, the cumulative contract amount for urban redevelopment projects by the top 10 construction firms, based on their construction capacity evaluations as of the fourth week of August, is about 30.87 trillion won. However, among the 25 projects in Seoul where these firms secured construction rights this year, only three—Apgujeong District 5, Shinbanpo Districts 19 and 25, and Seongsu Strategic Maintenance District 4—saw multiple companies compete in actual bidding. This represents just 12% of the total, while the remaining 22 projects proceeded without competition.
High-potential projects are no exception. DL E&C secured construction rights for Mokdong District 6 after submitting single bids twice, while Hyundai Engineering & Construction became the preferred bidder for Mokdong District 10, which has an estimated construction cost of about 2.61 trillion won, after two solo bids. District 12 also saw only GS Construction participate in the first bidding, resulting in a failure to secure a contractor.
While Bidding is Quiet, Brand Lounges are Growing in Mokdong
The atmosphere outside the bidding sites is quite the opposite. Mokdong New Town, comprising districts 1 to 14, is expected to transform from 26,629 units to approximately 50,000 units after reconstruction. The total project scale is estimated at around 30 trillion won, making it a key market for major construction firms in the coming years.
Hyundai Engineering & Construction opened the 'D.H. Mokdong Lounge' near Mokdong District 10 in March and another near District 7 in May. Daewoo Engineering & Construction has also established the 'Summit Mokdong Lounge,' focusing on districts 8, 11, and 14 as key project sites. DL E&C is using the 'Acro Mokdong Regency' near Omokgyo Station as a base after securing District 6 and is looking into additional projects, including District 14.
New entrants are also joining the fray. Lotte Engineering & Construction plans to sequentially open the 'Mokdong Leel Lounge' targeting districts 2, 7, and 14, while IPARK Hyundai Industrial Development is preparing to open the 'IPARK Mokdong Lounge' at the end of this month, focusing on District 11. POSCO E&C is exploring promotional bases in Mokdong, looking at districts 2, 4, and 14. GS Construction is also preparing a separate 'Xi Lounge,' and Samsung C&T is reviewing multiple projects, including districts 5, 9, and 13.
Rather than competing fiercely over a single district, construction firms are prioritizing brand recognition across Mokdong and managing multiple projects before selecting the most promising ones.
Attention is particularly focused on Districts 7 and 14. Mokdong District 7 involves a reconstruction project that will increase the existing 2,550 units to a maximum of 4,335 units over 49 floors. After receiving approval for the establishment of the association in July, the bid for construction management services to support contractor selection was announced on September 2. District 14, with a post-reconstruction plan for 5,123 units, is the largest in Mokdong. Industry insiders believe these two districts are among the most likely to break the trend of single bids and foster actual competition among major firms.
From '70 Million Won Moving Costs' to 'Securing Lounges'
The bidding competition is evolving. In 2017, at the Banpo Jugong District 1, 2, and 4, Hyundai Engineering & Construction and GS Construction faced off directly. Hyundai offered 70 million won in moving costs per household to 2,292 members, totaling over 160 billion won. The controversy led the Ministry of Land, Infrastructure and Transport to point out potential legal violations, prompting the association to remove the condition. Ultimately, Hyundai secured 1,295 votes, defeating GS Construction's 886 votes to win the construction rights. This bidding war is often cited as a prime example of extreme cash benefit competition.
In 2020, the focus of competition shifted to finance at Banpo District 3. Samsung C&T proposed financing the project cost, including construction costs, at an annual rate of 1.9%, while Daewoo Engineering & Construction offered a fixed interest rate of 0.9% on a project cost of 780 billion won. With options like post-sale and REITs included in the competitive conditions, strategies emerged to reduce the financial burden and sales risks for the association, moving away from simple cash support.
This year, the competition at Apgujeong District 5 has become even more intricate. DL E&C proposed a construction cost of 1,139,000 won per 3.3 square meters, a construction period of 57 months, a project cost interest rate of COFIX+0%, a relocation cost LTV of 150%, and a maximum 7-year deferral of contributions. Hyundai Engineering & Construction countered with a construction cost of 1,168,000 won, COFIX+0.49%, an LTV of 100%, and a maximum 4-year deferral of contributions. The bidding competition has expanded beyond brand and design to include the financial costs and project timelines that members will bear.
An industry insider noted, “In the past, direct confrontations centered on construction costs and financial conditions, but recently, there has been a stronger tendency to select high-potential areas, secure member connections first, and aim for long-term projects.”
* This article has been translated by AI.
Copyright ⓒ Aju Press All rights reserved.