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Hyundai E&C adds 1.76 trillion won of redevelopment rights in a single day
Hyundai E&C says its urban redevelopment orders reached 10.118 trillion won this year. The three construction rights it secured on the 19th account for 1.7574 trillion won of that, spread across Yeouido, Ulsan and Daegu.
The Investor · Invest desk
What happened
- Hyundai E&C said on the 20th that its cumulative urban redevelopment orders had reached 10.118 trillion won this year, the second straight year the builder has passed 10 trillion won.
- The company says it was the first South Korean builder to clear that annual mark last year, and the first domestic builder to reach it again this year.
- Those three sites carry 2,969 apartment units between them, plus 92 officetel studios at the Daegu scheme.
- Earlier wins this year include Apgujeong zones 3 and 5, Geumjeong Zone 2 in Gunpo, and the public redevelopments of Singil Zone 1 and Anyang's Chunghunbu area.
Compiled by The InvestorSomething wrong?How this is made
Why it matters
- cost The per-unit spread of 2.8 times between Yeouido and Ulsan means the cumulative won figure does not tell a lender or a shareholder what the book earns. Cost inflation on a 49-floor Seoul site lands on a different base from a 35-floor provincial one.
- constraint By the company's own account associations weigh financing capacity alongside brand. That keeps this class of order out of reach of contractors that cannot arrange the funding themselves.
- decision Mokdong Complex 10, at 4,248 units, is 1.43 times the apartment count of everything won on the 19th, so the next increment of fourth-quarter capacity is pointed at one Seoul site.
- precedent A repeated industry-first claim becomes bidding material at the next association vote, since brand is the first reason the builder gives for winning.
The three contracts price differently. Yeouido's Gwangjang 38-1 is the smallest of them at 546.3 billion won and the dearest per home: 405 units, so about 1.35 billion won of construction cost each [4][5][4]. In Ulsan, Zone B-01 is 711 billion won for 1,482 units, roughly 480 million won a unit [4][7][5]. The Myeongnyun district in Daegu delivers 1,082 apartments and 92 officetel studios for 500.1 billion won, about 426 million won across the 1,174 [4][8][6]. Per unit, Yeouido costs 2.8 times Ulsan [7]. It is also three buildings rising as high as 49 floors over seven basement levels [5]. Together the three are about 17 percent of the year's declared redevelopment orders [2].
These are construction rights won from owners' associations. The Yeouido association has 168 members, and Hyundai proposed calling the scheme "Willow 168" after them [6]; the plan is 405 units, 237 more than the association has members [8].
Testing whether redevelopment has replaced new-town greenfield building as the growth engine of Korean contractors takes the total order book. Hyundai E&C did not disclose one. It disclosed the redevelopment line and its ranking within the industry [1][2].
Hyundai's own explanation of the two consecutive 10 trillion won years puts brand first: the strength of its The H and Hillstate lines. Then design and product, its ability to arrange financing, and project management from permitting through completion [10]. "This result was created by the trust that association members placed in Hyundai E&C's brand, technology and financing strength," an official at the company said, "as well as our ability to see a project through to the end" [12].
I would put more weight on the mix than on the total. A book of rights at 480 million won a unit is a different business from the same won amount concentrated at 1.35 billion, and one cumulative figure covers both [4][5]. The counter-thesis is that volume is what compounds. If associations choose on brand and financing capacity, as the company says they do, then being first in the industry past 10 trillion won two years running is itself an argument in the next association's vote [2][10]. The test either way is how much of the 10.118 trillion converts into starts, and at what cost per unit [1].
What to watch
- A figure for the order target set at the start of the year, if it comes with fourth-quarter results, would show how far above plan 10.118 trillion won sits.
- Permitting and start dates at Gwangjang 38-1, Zone B-01 and Myeongnyun. Starts are when rights turn into billable work.
- Any disclosure of the total order book, the figure that would let the redevelopment share be measured against land-development work.