“Construction costs are high and business feasibility is low” No construction company bids for Gangnam reconstruction

by times news cr

2024-05-01 18:31:41

Due to the recession in the construction economy, reconstruction is sluggish.
The number of private contract complexes also increases in Gangnam’s 3 districts.

Due to the recession in the construction economy and a surge in construction costs, complexes undergoing reconstruction in the Gangnam area of ​​Seoul are also facing difficulties in selecting construction companies. While leading indicators of housing supply (licenses and construction starts) also continue to decline, reconstruction and redevelopment projects that are responsible for supplying urban housing also continue to be sluggish.

According to the construction industry on the 30th, not a single construction company submitted a business proposal in the bid to select a reconstruction contractor for Dogok Gaepo Hanshin Apartment that was held the previous day. This complex, with a scale of 620 units, is scheduled to be rebuilt into 816 apartment buildings in 7 apartment buildings from 3 floors underground to 35 floors above ground. The reconstruction association proposed a construction cost of 9.2 million won per 3.3㎡, but the construction companies seem to have judged that it would be difficult to secure business feasibility due to the small size of the complex and the small volume of general sales. According to the construction industry, the construction costs for the reconstruction of Sinbanpo 12th Apartment in Jamwon-dong, Seocho-gu and the reconstruction of Jinju Apartment in Jamsil (Jamsil Raemian I-Park) in Songpa-gu are 8.97 million won and 8.23 ​​million won per 3.3㎡, respectively (under negotiation).

Due to the deteriorating real estate market, construction companies are selectively engaging in maintenance projects that guarantee profitability, leading to cases of private contracts being awarded without competition even in major reconstruction complexes in Gangnam’s 3 districts. Recently, Daewoo Engineering & Construction, which participated alone, was selected as the preferred negotiation partner for the reconstruction of Sinbanpo 16th Apartment in Jamwon-dong. Sinbanpo 12th and Sinbanpo 27th in Jamwon-dong are conducting exclusive negotiations with Lotte Engineering & Construction and SK Eco Plant, respectively.

Meanwhile, housing permits and construction starts, which are leading indicators of housing supply, were also found to be decreasing compared to the previous year. According to the Ministry of Land, Infrastructure and Transport’s ‘March Housing Statistics’, the nationwide housing permits (25,836 units) and construction starts (11,290 units) decreased by 27.2% and 47.3%, respectively, compared to the same month last year. The number of ‘unsold units after completion’, also known as ‘malicious unsold units’, also increased by 2.8% (327 units) from the previous month to 12,194 units, increasing for 8 consecutive months.


Reporter Oh Seung-jun [email protected]

#Construction recession #Reconstruction slump

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2024-05-01 18:31:41

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