Reconstruction of the Traditional Wealthy Neighborhood 'Hangang Mansion' Accelerates but Faces Challenges

Bid Announcement for Surveying Company Selection on the 13th
3 Months Until Sunset Rule... Must Apply for Project Implementation Approval
New Association Formed but Compensation Issues for Vacant Land Must Be Resolved

▲ A view of Hangang Mansion in Ichon-dong, Yongsan-gu, Seoul, considered a "big catch" due to its high redevelopment potential among redevelopment complexes in the Gangbuk area.

[Asia Economy Reporter Lim On-yu] The reconstruction project of Hangang Mansion in Ichon-dong, Yongsan-gu, Seoul, once known as a symbol of affluent neighborhoods along the Han River, is entering its final sprint to obtain project implementation approval with just over three months left before the sunset clause deadline. However, the redevelopment industry observes that it remains uncertain whether the project can be completed within the deadline, as significant challenges such as compensation issues for owners of vacant land still need to be resolved.

According to the redevelopment industry on the 14th, the Hangang Mansion Reconstruction Association announced a bid yesterday to select a surveying company. This selection is for preparing documents related to the application for project implementation approval. The association’s move is due to the fact that if the application for project implementation approval is not submitted by April 25, the sunset clause will be applied, potentially leading to the cancellation of the redevelopment zone designation.

Built in 1971, this apartment complex is considered a prime reconstruction site even among the upscale apartment neighborhoods along the Han River in Ichon-dong. It is also famous as the residence of well-known celebrities such as actress Kang Bu-ja and singer Patti Kim. The complex consists of 23 buildings with five floors each, totaling 660 households, including not only small and medium-sized units but also large apartments with exclusive areas of 179㎡. The complex faces the Han River to the south and is close to Ichon Station on Subway Line 4, raising expectations that if reconstruction succeeds, it will become a landmark in the area.

The reconstruction push began in earnest in December 2003 with the formation of a preparatory committee for the association. However, the project process was not smooth, with the association only receiving approval for its establishment in 2017, 14 years later. The project seemed to gain momentum after passing architectural review in 2018, but internal conflicts within the association led to the dismissal of the chairman, causing another crisis. The newly formed executive team in March last year selected asbestos investigation companies and specialized management firms for redevelopment projects in September, accelerating efforts to apply for project implementation approval within the year.

However, the redevelopment industry still views it as uncertain whether the implementation approval can be applied for by the end of April, before the sunset clause deadline. This is mainly due to persistent disagreements between the association and some owners over compensation for vacant land within the complex. A redevelopment industry official said, "If compensation is provided according to the demands of vacant land owners, the burden per association member would reach 70 million KRW, making negotiations difficult." Some association members, concerned that profitability will decrease due to the reconstruction excess profit recovery system, are also demanding a halt to the project, posing another obstacle.

Accordingly, the association plans to hold a general meeting next month to facilitate discussions among members to resolve the vacant land compensation issue. A representative from real estate agency Y in the area said, "Hangang Mansion has a land share ratio close to 100%, making it a highly viable apartment project. If negotiations over vacant land fail, resolution through escrow is possible, but time is the issue." Despite the sluggish progress, prices have remained strong. For example, the market price of a 102㎡ unit in this apartment was around 1.9 billion KRW in early 2018 but steadily increased to 2.38 billion KRW in October last year.

Meanwhile, according to the Urban and Residential Environment Improvement Act, if redevelopment projects do not progress to the next stage within a certain period, the city or provincial governor can revoke the redevelopment zone designation ex officio. The sunset clause period between association establishment approval and project implementation approval application is three years.