[비즈한국] The bid for selecting a contractor for the reconstruction of Apgujeong Zone 2 in Gangnam-gu, Seoul, considered the biggest catch of the second half for maintenance projects, has fallen through after Hyundai Engineering & Construction000720 submitted the only bid. Apgujeong Zone 2 is the first site within the Apgujeong Apartment District to select a contractor, with a total construction cost of 2.7 trillion won and a bid deposit of 100 billion won. Initially, South Korea's two largest construction firms, Samsung C&T028260 and Hyundai E&C, had expressed interest, but the competition did not materialize after Samsung C&T announced it would not participate in protest of the association's bidding guidelines.
According to industry sources on the 11th, the bidding for the Apgujeong Zone 2 reconstruction project, which closed at 2 p.m. that day, failed as only Hyundai E&C submitted a bid. The association is expected to issue a second tender to select a contractor, and if this also fails, the project will likely switch to a private contract. Under the Urban and Residential Environment Maintenance Act, competitive bidding is the rule for selecting contractors for maintenance projects, but if bids fail repeatedly, a private contract can be awarded.
Previously, Hyundai E&C stated in May, "Apgujeong Hyundai is a symbolic place for Hyundai E&C, and we will do our best to preserve our historical heritage while protecting the pride and value of the association members."
Apgujeong Zone 2 is the first maintenance site in the Apgujeong Apartment District to select a construction company. Currently, the Apgujeong Apartment District is undergoing reconstruction divided into six zones, including Hyundai Apartments (1st–14th complexes), Hanyang Apartments (1st–8th complexes), and Misung Apartments (1st–2nd complexes). Apgujeong Zone 2 includes Hyundai 9th, 11th, and 12th complexes as well as Shin-Hyundai. The association issued a tender in June to build 14 apartment buildings (2,571 households) with up to 65 floors above ground. The total construction cost is 2.7489 trillion won, and the bid deposit is 100 billion won.
Initially, South Korea's two top construction firms, Samsung C&T and Hyundai E&C, showed interest in the Apgujeong Zone 2 contract. Ahead of the bidding, Samsung C&T established an 'Apgujeong Office' under its Housing Business Division in June. It later partnered with commercial banks and international architects to prepare project costs and alternative designs for the site. Hyundai E&C also demonstrated its commitment by filing a trademark for the 'Apgujeong Hyundai Apartment' name in March and expanding its reconstruction task force (TF) into an 'Apgujeong Reconstruction Sales Team.'
However, Samsung C&T ultimately decided not to participate, protesting the association's bidding guidelines. The reasons cited were the association's imposition of unusual rules, such as: heavily restricting the scope of alternative designs; requiring all interest rates to be presented only in a CD+spread format; prohibiting proposals for move-out loans (LTV) exceeding 100%; banning additional move-out loan interest rate proposals; and disallowing the use of other financial techniques. At the time, Samsung C&T stated, "We judged that under the current bidding guidelines, it would be difficult to create a global landmark featuring world-class design and architecture that our company aims for."
Meanwhile, 97% of maintenance projects awarded last year to the top 10 domestic construction firms were through private contracts. Of the 63 projects, 61 selected their builders via private contracts. The only projects where actual competition occurred were the reconstruction of Hanyang Apartments in Yeongdeungpo-gu, Seoul (774 billion won), won by Hyundai E&C, and the reconstruction of Dogok Gaepo Hanshin Apartments in Gangnam-gu, Seoul (438.5 billion won), won by DL E&C375500 (Related article: "HDC & POSCO to Compete for the 1 Trillion Won Yongsan Maintenance Depot Zone 1 Contract").