LH awards nearly all contracts without competition over past 5 years

Land Ministry reviewing streamlined contractor selection process

Most redevelopment sites managed by the Korea Land and Housing Corporation have had their contractors selected through negotiated contracts. Pictured is the Wangseok 1 public housing district in Namyangju, Gyeonggi Province, one of the third-generation new towns. [Yonhap]
Most redevelopment sites managed by the Korea Land and Housing Corporation have had their contractors selected through negotiated contracts. Pictured is the Wangseok 1 public housing district in Namyangju, Gyeonggi Province, one of the third-generation new towns. [Yonhap]

Most redevelopment sites managed by the Korea Land and Housing Corporation have had their contractors selected through negotiated contracts after repeated failed bids, it has been confirmed. As the importance of publicly led housing supply grows for market stability, concerns are mounting that the cycle of repeated bid failures could slow project timelines.

According to an analysis of LH's redevelopment project status data submitted to the office of People Power Party lawmaker Kim Mi-ae of the National Assembly's Land and Transport Committee on Wednesday, 16 of the 17 redevelopment sites LH has managed over the past five years selected their contractors through negotiated contracts. The project period covered Nov. 21, 2022, through Aug. 29, 2026. The initial contracted construction costs for those 16 sites totaled approximately 12.26 trillion won ($9.02 billion), accounting for 99.5 percent of the combined 12.33 trillion won across all 17 sites.

Under the Urban Improvement Act and the guidelines governing redevelopment contract procedures, publicly led housing projects may proceed to negotiated contracts when open competitive bidding fails at least twice. LH said construction companies have been reluctant to participate in bidding across redevelopment projects amid concerns over shrinking margins due to soaring construction costs, high interest rates and a project financing credit crunch.

In fact, all 17 sites where contractors were eventually selected had seen two or more failed bids. The Sinheung 1 and Yeongjin Market sites each recorded five failed bids. Cheonho A1-1, Anyang Chunghunbu and Taepyeong 3 each saw four failures, while Sujin 1 had three. Among these, four sites had initial contracted construction costs exceeding 1 trillion won — and all four selected their contractors through negotiated contracts. Sujin 1 (1.56 trillion won), Anyang Chunghunbu (1.39 trillion won), Sinheung 3 (1.27 trillion won) and Sinheung 1 (1.22 trillion won) all went through negotiated contracts despite their scale.

The Sinheung 1 zone issued its first public notice in April 2022, followed by four more notices through late September of that year, with a contractor finally selected in November 2022. Taepyeong 3 issued its first notice in June 2025, failed four times, and did not secure a contractor until July this year — more than a year later.

Of the 17 sites that had completed their public notice process as of late August this year, only Yeongjin Market went through competitive bidding. Even then, Yeongjin Market failed five times after its first notice in October 2023, taking nearly two years to finalize a contractor in October 2025.

Repeated bid failures can stall projects significantly. Delays in subsequent steps such as ground-breaking and resident relocation drive up financing costs and increase the burden on residents. Park Hap-su, an adjunct professor at Konkuk University's Graduate School of Real Estate, said the pattern of multiple failed bids followed by negotiated contracts signals that private-sector participation is weak because adequate construction costs and project viability are not guaranteed. "As delays in contractor selection affect the pace of the entire project, efforts to secure appropriate construction costs will be necessary," he said.

LH has also acknowledged the problem of repeated bid failures. An LH official said bid failures also occur at privately led sites, and that the Ministry of Land, Infrastructure and Transport is reviewing a plan to streamline the contractor selection process announced under the government's Aug. 13 real estate measures. "LH plans to actively adopt the streamlined procedures to accelerate project timelines," the official said.

Lawmaker Kim said redevelopment projects have a significant impact on residents' daily lives and living environments, making it important to ensure transparency in the contractor selection process and the appropriateness of construction costs. "LH needs to closely examine the causes of repeated bid failures and check whether there are areas requiring improvement, including transparency in contractor selection and the adequacy of construction costs," she said.


hope@heraldcorp.com