Competition is intensifying between HDC Hyundai Development Company and POSCO E&C ahead of the contract signing for the 'Yongsan Maintenance Yard Zone 1' redevelopment project. In the early stages of the bidding, both companies promised 'construction quality' by highlighting their respective strengths.
According to the construction industry on the 23rd, as the selection of a construction company for the Yongsan Maintenance Yard Zone 1 redevelopment is set for mid-June, the bidding war between HDC Hyundai Development Company and POSCO E&C is showing signs of overheating. On the 15th, only these two construction companies participated in the bidding for the selection of a construction company by the association. They both have experience in complex development.
The two construction companies are actively promoting financial support measures for the association's members after the bidding. HDC Hyundai Development Company proposed a construction cost of 8.58 million won per 3.3 square meters. POSCO E&C offered a minimum relocation cost of 2 billion won per member (LTV 150%) relative to the construction expenses. They also emphasized that the construction period would be relatively short at 42 months.
POSCO E&C proposed over 1.5 trillion won in business promotion costs. When divided by the number of members, this translates to approximately 340 million won per household. Additionally, without the Housing and Urban Guarantee Corporation (HUG) guarantee, financing is being facilitated through POSCO E&C's credit enhancement so that funds can be injected at the lowest interest rates when the association needs them most.
This represents a different aspect from the early bidding competition regarding 'construction quality' that was fiercely debated before the bids. Until the beginning of this month, HDC Hyundai Development Company demonstrated its intention to create a so-called 'Yongsan Town' through collaboration with various companies. HDC Hyundai Development Company has already developed Yongsan Station and constructed HDC I-Park Mall, and it has announced plans to connect complex projects such as the Yongsan Railroad Hospital site and the underground development project of the Yongsan Station park.
POSCO E&C has emphasized that it has the most experience in constructing super-high-rise buildings in the country. It decided to apply the high-end brand 'Otieer' for the first time in Yongsan. POSCO E&C completed the super-high-rise building LCT in Busan in November 2019. It was developed as a super-high-rise complex. The total floor area is 661,138 square meters, with the landmark tower (411m) comprising 101 floors among three buildings. In July 2020, the Parc.1 (333m) in Yeouido was completed. Additionally, they have built the Northeast Asia Trade Center (305m) in Songdo, Metapolis (249m) in Dongtan, The Sharp First World (237m) in Songdo, and The Sharp Central Star (207m) in Busan.
Concerns are beginning to emerge from the construction industry regarding the fierce competition between the two large construction companies. Since last year, construction companies entering the maintenance industry have been reluctant to compete due to concerns over profitability and risk management. There are opinions that the outlook for construction and the overall economy is grim, making financing difficult. It is also uncertain how much the currently set construction costs will rise by the time of completion.
A representative of a large construction company said, 'HDC Hyundai Development Company has its headquarters in Yongsan, so it has a significant interest in projects in the Yongsan area, and I heard that POSCO E&C has invested considerable time in this site. However, the current competition appears excessive, and there are concerns that there may be issues during the construction process.'
An official from HDC Hyundai Development Company stated, 'We are preparing a master plan to transform the Yongsan Maintenance Yard Zone 1 into a global commercial area and business hub,' adding, 'Along with our headquarters, HDC Hyundai Development Company will be able to synergize with the projects we are developing in Yongsan.'
A representative from POSCO E&C noted, 'From a medium to long-term perspective, we are formulating a strategy to secure urban development projects to enhance brand value and awareness in key regions, and we are actively pursuing business in this regard.' They added, 'Winning the bid for Yongsan Maintenance Yard Zone 1 is part of this effort, and we plan to concentrate our efforts on securing it considering its future value.'
The Yongsan Maintenance Yard Zone 1 project involves the complex development of 12 apartment buildings comprising 777 units and 894 officetels, along with commercial and office facilities, on a site of 71,900.8 square meters in the Hangangno 3-ga area of Yongsan. The expected total construction cost by the association is approximately 955.8 billion won.