An underground parking lot at an apartment complex located west of Seoul collapsed, causing its constructor to promise to rebuild it from scratch. Photo courtesy of the Ministry of Land, Infrastructure and Transport

Korean contractor facing hundreds of billions of dollars in new costs

South Korean contractor GS Engineering & Construction (E&C) announced on July 6 that it would rebuild a whole apartment complex from scratch after an accident.

In April, the roof of the underground parking lot between two apartment buildings collapsed, causing complaints from people who were supposed to move in later this year.

The government inspected the building to conclude that the whole apartment project had been full of problems from design to supervision of the construction.

Against this backdrop, requests surfaced to demolish the whole apartment complex and rebuild.

Apologizing for the unprecedented incident, GS E&C decided to accept the demand, although the construction of the complex had been done almost 70 percent. State-run Korea Land & Housing Corporation is also involved in the project.

GS E&C, a major affiliate of GS Group, also plans to carry out safety inspections of its 83 apartment construction sites across the country.

As a result, the builder is expected to burden hundreds of millions of dollars. The apartment complex is located east of Seoul and is composed of 17 buildings for around 1,700 units,

The company chalked up an operating profit of $215 million last year. But it is expected to take more than the profit to rebuild the apartment complex.

The share price of GS E&C plunged by 19.47 percent on July 4 on the South Korean stock exchange.

After the accident in late April, the company saw its share prices depreciate by around 35 percent.

In fact, this is not the first time for GS E&C’s building to show problems. In March, residents of an apartment built by GS E&C were evacuated as cracks were found in the pilotis.