Mid-tier construction firms searching for growth as regional housing markets slump are winning a string of contracts for redevelopment projects in Seoul. Rather than competing for the large rebuilding and redevelopment projects dominated by major builders, they are targeting street-block housing redevelopment and small-scale rebuilding, while picking up adjacent sites to build brand presence.
Mid-tier builders have been entering bidding contests for Seoul redevelopment projects and securing construction rights, industry sources said on the 28th. They are expanding orders mainly in relatively smaller projects such as street-block housing redevelopment and small-scale rebuilding, rather than the large rebuilding and redevelopment projects where major firms compete.
Doosan E&C has won six redevelopment projects in Seoul alone this year, securing work worth a combined 897.2 billion won. The projects include the rebuilding of Shinan Villa in Magok-dong, the street-block housing redevelopment at 655-78 Sillim-dong, public redevelopment in the Hongeun District 1 and Chungjeongno District 1 zones, redevelopment around Cheonwang Station District 3 and redevelopment in the Mapo-ro 5-2 zone. Outside Seoul, the company is diversifying its portfolio by securing larger projects. On the 20th of this month, it won a 515.4 billion won urban public housing complex project in Wonmi, Bucheon, Gyeonggi Province.
Hoban Construction, which has made redevelopment a new growth business and strengthened its related organization, has also won five projects in Seoul this year. After winning the Myeonmok Station 6-3, 6-4 and 6-5 zones at once in Jungnang-gu, it was selected on the 19th of this month as the builder for the rebuilding of Changdong Sanga 1st Apartment in Dobong-gu and the street-block housing redevelopment in the Junghwa Station 2-6 zone in Jungnang-gu. In the Myeonmok-dong area in particular, the company plans to create a brand town through linked orders. Individual sites are smaller than large redevelopment projects, but the calculation is to secure multiple sites and expand brand influence within a single residential area.
Kye-Ryong Construction Industrial, headquartered in Daejeon, is also expanding its Seoul redevelopment orders. After winning a street-block housing redevelopment project around 241-2 Gocheok-dong in Guro-gu in May, it was selected this month as the builder for the Sinyeong District 1 housing redevelopment project in Sinyeong-dong, Jongno-gu. The two projects are worth a combined 194.9 billion won.
Jeil Construction, headquartered in Jeonnam-Gwangju Special Metropolitan City, secured its first Seoul redevelopment work of the year last month, winning construction rights for zones 2-2 and 2-4 of the Moa Town project at 354 Hwagok 1-dong, Gangseo-gu, Seoul. Together the two projects cover about 850 units. The win is seen as the result of groundwork laid since last year through participation in project briefings.
Cases of expansion into prime Seoul areas such as Gangnam-gu are also increasing. HS Hwaseong, headquartered in Daegu, secured construction rights last year for the small-scale rebuilding of Jamwon Hanshin Town in Jamwon-dong, Seocho-gu, and the small-scale rebuilding of Shinsung Yeonlip in Seongsu-dong, Seongdong-gu. Late last month it was selected as the builder for the street-block housing redevelopment of Bichi Town in Daechi-dong, Gangnam-gu, widening its business scope. An HS Hwaseong official said the move goes "beyond simply broadening our project areas and is aimed at establishing a stable foundation for growth."
Mid-tier builders have turned to redevelopment in Seoul and the surrounding metropolitan area because the prolonged slump in regional housing markets has increased the need to diversify. According to the Ministry of Land, Infrastructure and Transport, unsold homes nationwide totaled 68,217 units as of July, of which 67,223, or 98.54%, were outside Seoul. A reduced supply of public land such as new towns compared with the past, along with fewer opportunities to act as project developer, is also cited as a reason mid-tier builders are turning to redevelopment. An official at one mid-tier construction firm said, "There is a limit to growth in regional housing markets where demand is insufficient, so portfolio diversification is necessary," adding, "While responding to changes in the environment, we are actively seeking new business opportunities beyond our existing public land projects."
