An artist conception shows the redevelopment of the 1st Banpo LH Apartment Complex, to be done by Hyundai E&C. (Photos: Hyundai E&C)
The final winner of a 2.6 trillion won mega-project to redevelop the 1st Banpo LH Apartment Complex went to Hyundai E&C. The contractor’s successful bid for the landmark redevelopment project along the Han River will likely give Hyunda E&C an advantage in further redevelopment projects down the road.
A vote conducted by the 1st Banpo LH Apartment Complex Cooperative at the Jamsil Indoor Gymnasium on Sept. 27 resulted in Hyundai E&C getting 1,295 votes to defeat GS E&C, which obtained 996 votes. Two thousand ninety-two members of the cooperative, or 96 percent of the total, participated in the voting.
Hyundai E&C and GS E&C made all-out efforts to win the hearts and minds of voters. During the absentee voting period, the two companies set up a “Hyundai Cafe” and “GS Cafe,” respectively. They offered free coffee to cooperative members in the housing complex. Officials of the two construction companies were engaged in campaigns to win over voters’ minds in front of the Jamsil Indoor Gymnasium.
Hyundai E&C won by turning to a strategy that stressed trust and sympathy. As Hyundai E&C President Chung Soo-hyun took the podium to explain his company’s project, the construction company showed a video showing former Hyundai founder and honorary chairman Chung Ju-yung in the background. Such phrases as “We’re Hyundai. Hyundai makes good on promises” splashed across the screen. President Chung quoted the late honorary chairman as saying, “If credit is lost, it comes to an end” to stress that Hyundai E&C will fulfill everything it promised to the cooperative members. He said he felt an affinity toward the 1st Banpo LH Apartment Complex because his mother once lived there. Hyundai E&C submitted a project proposal priced at 200 billion won more than GS E&C, with the goal of making the apartment complex the nation’s best, President Chung noted. On the other hand, GS E&C emphasized transparent bidding. GS E&C President Lim Byeong-yong countered by saying that Hyundai E&C did not publicly disclose details of the request for proposal (RFP). Hyundai E&C set aside 502.6 billion won in special construction expenditures, but experts lowered the figure to about 225 billion won. GS E&C appealed for cooperative members’ cool-headed assessment.
The race lasted about one month, with contractors submitting their bids on Sept. 4. The mega-project was full of twists and turns. The two contractors engaged in publicity blitzkriegs with repercussions for the Korean housing industry. The bidding was roiled by Hyundai E&C’s proposal to offer “free moving” worth 700 million won, but the offer had to be retracted by the cooperative in accordance with a corrective order by the Ministry of Land, Infrastructure and Transport (MOLIT), citing a violation of the regulations.
On the same day, the project received the go-ahead form the Seocho Ward Office. The nod was issued seven weeks after an application was submitted. The cooperative plans to sign a contract with Hyundai E&C at the earliest possible date. The cooperative said it wants to finish up the process with the goal of avoiding tax on excess earnings from reconstruction, to be put into force next year. To this end, the cooperative and the contract have decided to turn to a joint business method to speed up the process.
The 1st Banpo LH Apartment Complex was built in 1973. The redevelopment project calls for the construction of 35-story apartments with a combined 5,388 units.
An aerial view of a project to redevelop the 1st Banpo LH Apartment Complex.