Key Highlights :
Recent news of the collapse of an apartment complex construction site in Incheon has sparked a blame-game between GS E&C and Korea Land & Housing Corp. (LH) over who is responsible for the incident. Industry officials have criticized the two companies for attempting to shift the blame onto each other instead of taking responsibility for the collapse.
The construction arm of GS Group questioned the apartment complex's design, which was made by a company hired by the state-run real estate developer. LH, however, emphasized that GS E&C was also involved in designing the apartment complex, located in northern Incheon's Geomdan New Town.
The attitudes of the two companies have angered the owners who were expecting to move into the apartment complex in December. The leader of the apartment complex's future residents expressed disappointment over the blame-shifting.
In response to the situation, Minister of Land, Infrastructure and Transport Won Hee-ryong warned that both companies should brace for the possibility of being held responsible for the collapse. Incheon Mayor Yoo Jeong-bok ordered an inspection of the city's construction sites that are managed by GS E&C.
As a result of the recent developments, GS E&C's stock price has fallen sharply. Korea Investment & Securities analyst Kang Kyung-tae warned that in a worst-case scenario, the builder will pay 158 million won every month in compensation for delays in moving residents into the apartment complex.
GS E&C has been saddled with the biggest amount of apartment defects among major building developers. Data provided by the land ministry showed that the ministry was asked between 2020 and 2022 to review 573 cases related to defects in apartment buildings constructed by GS E&C.
LH also faced severe public criticism in 2021, as its employees were found to have made speculative investments in real estate, based on secret information that they obtained from the company.
The situation has highlighted the need for both companies to take responsibility for their actions and to ensure that safety is the top priority in all construction projects. It is also essential that the two companies work together to create a safe environment for the future residents of the Incheon apartment complex.