The Kumho Engineering & Construction consortium has been selected as the top contractor for the urban public housing complex project at Yeonsinnae Station in Seoul. This project was overlooked by construction companies last year due to low feasibility, resulting in two failed bids. However, after three rounds, a contractor has been found. The Korea Land and Housing Corporation (LH) increased the project budget, improving feasibility, coupled with a prolonged construction recession, which has heightened construction companies' interest in stable public projects.
According to LH on the 12th, the third evaluation committee for the selection of the operator for the urban public housing complex project at Yeonsinnae Station chose the consortium of Kumho Engineering & Construction and Daebo Construction as the top contractor on the 8th. Bomi Construction was selected as the second contractor.
The contractor for the project site will be finalized next month through voting at a resident council after undergoing processes such as resident notifications this month.
An LH official noted, “The results of the evaluation committee for the Yeonsinnae urban complex project have been released,” and added, “The final contractor selection will be decided at the resident council meeting held in early June.”
The Yeonsinnae urban complex project aims to develop a mixed-use complex of 392 dwellings on a 8,247-square-meter site near Yeonsinnae Station in Eunpyeong-gu, Seoul.
Urban complex projects are initiatives led by the public to quickly supply housing in areas that have become under-utilized and aged, which are difficult to develop through existing private projects, such as transit zones, semi-industrial areas, and low-rise residential areas. This was announced as part of the 2-4 real estate measures in 2021. Since public institutions are involved, permitting can proceed swiftly.
The Yeonsinnae urban complex project underwent two rounds of operator selections last August, but both were unsuccessful. Given that this project is being pursued in a transit area in downtown Seoul, active participation from construction companies was expected; however, they did not bid, citing decreased feasibility due to rising construction costs.
However, the atmosphere changed somewhat in the third operator selection this year. LH increased the project budget for the Yeonsinnae urban complex from 193.9 billion won to 224.4 billion won, improving feasibility and attracting greater interest from construction companies.
In particular, the continued downturn in the construction industry has increased private construction companies' preference for stable public projects, which influenced the bidding for this Yeonsinnae urban complex project. Additionally, with feasible projects in Seoul being limited to redevelopment and reconstruction, the ability to develop a transit area and enhance the company's reputation contributed to this project successfully avoiding a third failure.
An industry insider explained, “Previously, construction companies had little interest in urban complex projects,” and added, “However, as the construction recession continues and construction costs keep rising, the shrinking of their project areas has led them to pay more attention to urban complex projects.” This insider continued, “In a situation where projects in Seoul are limited to redevelopment, reconstruction, and streetscape improvement projects, construction companies have increasingly opted for public projects that offer assured payment guarantees to minimize business risks.”
Alongside Yeonsinnae Station, other regions selected as leading areas for urban complex projects in December 2021 are also gaining momentum, including the ▲Banghak Station in Dobong-gu, ▲the eastern side of Ssangmun Station in Dobong-gu, ▲the western side of Ssangmun Station in Dobong-gu, ▲Jeungsan 4 in Eunpyeong-gu, and ▲Sin-gil 2 in Yeongdeungpo-gu. The fastest-moving project among the leading areas is the “Dobong-gu Banghak Station urban complex project,” which has selected Doosan as the final contractor and is proceeding with the project.