Hoban E&C ranked first in the country in terms of securing LH public housing sites through’bee bidding’ that mobilized dozens of camouflage affiliates. Central photo
Amid growing suspicions of illegal land speculation by LH (Korea Land and Housing Corporation) employees, it was found that some construction companies who made tricks on the public housing created by LH took up huge profits.
Lakeside construction occupies 10% of LH public land
Trick to mobilize dozens of camouflage affiliates
From 62 to 10 in the industry ranking
Public housing lot lottery system and evaluation system
It is pointed out that it is because the government and LH assisted the Paper Company (a company on paper with no substance) to win a bid for the apartment site in a public housing site called’Super Lotto’ because it can earn tens of billions of dollars per lot. Until recently, the bidding method for apartment land in public housing was a’simple lottery system’, so the more disguised affiliates were mobilized, the higher the probability of winning.
According to the data on’LH 2008-2018 apartment site bidding and successful bid status’ data received by Rep. Song Eon-seok from LH, some construction companies such as Lakeside Construction mobilized dozens of paper companies to secure as many as 10% of LH’s public housing sites. . During this period, 44 (9.3%) of the 473 public housing units sold by LH were occupied by lakeside construction. In terms of the rate of securing LH public housing sites, it ranks first in the country.
In addition, it was found that 30% of the public housing land supplied by LH was taken by five mid-tier construction companies, including lakeside construction. Eui-won Song argued that “Hoban Construction participated in a lot of paper companies in the lottery.” In fact, during that period, Hoban Construction established more than 40 affiliates, of which more than 20 have fewer than 10 employees.
An official in the construction industry who requested anonymity said, “Middle-sized construction companies such as J Company and Company W, who used the tricks of’bidding bees’ like the lakeside, made very good profits from the public housing site created by LH.”
On the 24th of last month, the 6th 3rd new city and Gwangmyeong and Siheung districts designated as new public housing sites. News 1
In fact, based on the public lands secured by such tricks, Hoban Construction has raised a high operating margin (the ratio of operating profit to sales) of around 20% every year. In the case of 2018, the operating margin reached 24%, with an operating margin of 2792 billion KRW with sales of 1.174.4 billion KRW. In the same year, the operating margin of large construction companies such as Hyundai E&C and Daewoo E&C was 5%.
Based on such high profits, the construction industry ranking (construction capability evaluation ranking) of Lakeside Construction jumped from 62nd in 2010 to 10th in 2019, entering the ranks of the top 10 construction companies.
The Citizens’ Federation for Economic Justice Practices (Gyeongsil-ryeon) also claimed that these construction companies earned more than 6 trillion won in pre-sale profits by bidding for public housing by an expedient method. Among them, Hoban Construction generated sales of 10,137.9 billion won in public housing sites built by LH, and sales profits of 2.62 trillion won. This is an average of 65.5 billion won in sales revenue per parcel.
Construction companies are striving to secure land to build apartments. Bando E&C recently won a bid for 255.7 billion won for the site of the Gyeonggi Office of Education’s Southern Office (Jowon-dong, Jangan-gu) at an appraised price of 1156 billion won. As 16 bidders competed in price, the successful bid price (compared to the appraised price) increased to 221%. An official at Bando Construction said, “The competition is fierce because the land where you can build an apartment is so valuable.”
An official from the Ministry of Land, Infrastructure and Transport’s Public Housing Management Division said, “To widen the opportunities for small and medium-sized companies to participate, some construction companies made bids for the fact that the government could not strict public housing site bid qualifications.” The Ministry of Land, Infrastructure and Transport decided to revise the law to help construction companies that build a lot of rental housing in order to receive public housing land.
The’Revision of the Enforcement Decree of the Special Public Housing Act’ will be implemented from the 23rd, and it is the contents of evaluating the’rental housing construction plan’ and’profit sharing degree’ of housing builders participating in public housing site supply tenders.
“Previously, the lottery system reached 70%, but in the future, we plan to gradually increase the competitive bidding and private contract methods to evaluate the contribution to rental housing supply,” said Kim Eun-jung, head of the Ministry of Land, Infrastructure, and Transport. He said, “We are not going to draw a lottery, but rather about social contributions such as profit sharing.”
Reporter Han Eun-hwa [email protected]
