Recently, due to rising construction costs and a downturn in the construction market, construction companies are becoming more selective in their bidding, leading to a series of failures in the bidding process for construction companies across Seoul's maintenance project map, while local maintenance sites are facing even more difficulties.

The appearance of the new apartment construction site. /Courtesy of News1

According to the construction industry and others on the 23rd, the Sajik 3 district in Dongnae-gu, Busan, closed its bidding for the selection of a construction company on the 13th, but only GS Engineering and Construction participated, resulting in a failed bid. At the on-site briefing held on the 15th of last month, five construction companies including GS Engineering and Construction, Hanwha, KCC E&C, Hyosung Heavy Industries, and Dongwon Development attended, but only GS Engineering and Construction participated in the final bid, leading to a non-competitive bidding process. The association plans to hold a second on-site briefing on the 23rd of this month and will re-announce the selection of a construction company. The deadline for the second selection of a construction company is the 22nd of next month.

Previously, the 'Myeongjang 2 district redevelopment project' in Dongnae-gu held three bidding rounds in November and December last year, and in February this year, but all three rounds failed due to lack of participation from construction companies. As a result, the association decided to switch to a negotiated contract for the maintenance project after discussions in the congress and executive meetings.

In the redevelopment of the Goejeong 8 district in Sahagu, the Gaya 4 district redevelopment in Busanjin-gu, and the Yeonsan 10 district redevelopment in Yeonje-gu, failed bids occurred during the bidding process, and construction companies were sought through negotiated contracts.

Not only in Busan but also in other regions like Daejeon, Daegu, and Gwangju, construction companies are unable to be found. According to the redevelopment association in Hodong district, Jung-gu, Daejeon, no construction companies participated in the second selection of construction companies in April, resulting in a failed bid. In the first on-site briefing, HJ Shipbuilding & Construction and Jeil Construction participated, but they did not bid in March. The association then held the second on-site briefing in the same month, but no construction companies participated.

Experts note that there are many old houses in rural areas that need maintenance, but demand is lacking, causing difficulties for existing residents. Seo Jin-hyung, a professor at Kwangwoon University, stated, "Rural areas are indeed becoming shrinking cities compared to the metropolitan area, but there is a need for improvement in the residential environment. However, due to the lack of business viability, construction companies face decreased revenue, and for business operators, expenses are incurred without achieving investment returns, leading to prolonged concerns. This situation is negatively impacting local residents who need improvements in their living conditions."

Construction company officials explain that it is even more difficult to compete for local projects while avoiding competition in Seoul. They particularly note that rural areas have unfilled properties, making it harder for local mid-sized and small construction companies to invest in promotions.

Local mid-sized and small construction companies also express the difficulty of entering the maintenance business due to the recent economic downturn. A representative from a local construction company stated, "The industry's circumstances are so poor that they are hesitant to pursue projects unless they are in Gangnam, even within Seoul, which makes the situation in rural areas even more serious. Especially with unfilled properties piling up in rural areas and prolonged downturns in real estate, large construction companies are being passive in securing new projects in the regions, making it difficult to find construction companies even in areas that could be considered higher-grade locations in the countryside."

Another construction company official said, "It is fortunate if a business site can be conducted through negotiated contracts after a failed bid," adding, "The recent bankruptcies of local construction companies have also affected the atmosphere at business sites."