[Beginner's Guide to Real Estate] Redevelopment? Reconstruction? ... Clarifying Confusing Urban Renewal Projects for You

[Asia Economy Reporter Lee Chunhee] When you become a real estate reporter, friends sometimes suddenly message you on KakaoTalk. "How do I apply for a housing subscription?" "What is first priority?" For the 2030 'Burin-i (Real Estate + Beginner)' who only have subscription savings accounts created by their parents when they were young, I am trying to create a guide.

When looking for newly available apartments through subscription, you often see expressions like "00 Apartment is supplied through reconstruction" or "This is a complex developed by redeveloping the 00 redevelopment zone." Reconstruction and redevelopment are terms you hear often, but it can be confusing to distinguish between them.

The simplest way to differentiate reconstruction and redevelopment is: reconstruction refers to demolishing an existing apartment building and rebuilding a new apartment, while redevelopment refers to demolishing an old residential area and building apartments. Since many old Jugong apartments are renewed through reconstruction and old villa-dense areas are reborn through redevelopment, this classification generally fits.

▲ Model of 'Leael Daechi' supplied by reconstructing Daechi 2 District, Gangnam-gu, Seoul (Photo by Lee Chunhee)

However, strictly speaking, this is not always accurate. A representative case is 'Le El Daechi' in Daechi-dong, Gangnam-gu, Seoul, which was launched in November last year. Although it was an old residential area, it was classified as a 'Daechi 2 District Reconstruction' project.

The most precise way to classify the two types of maintenance projects is by the condition of the residential environment and maintenance infrastructure. Reconstruction is a project implemented in areas where maintenance infrastructure is good but old and poor-quality buildings are concentrated, aiming to improve the residential environment. Landowners gather to form a union, demolish buildings, and construct new housing. On the other hand, redevelopment targets areas where not only old and poor-quality buildings but also roads, parks, parking lots, schools, and other maintenance infrastructure are deteriorated. It can be said that all infrastructure is newly built.

Therefore, redevelopment, which renovates the entire area, has a stronger public character, while reconstruction, which targets only specific housing, has a more private character.

Because of this, there are differences in union membership qualifications and the compulsory nature of project progress. In reconstruction, only those who own both land and buildings are granted union membership, whereas in redevelopment, owning either land or building is sufficient to become a union member. During project progress, in reconstruction, those who do not agree to the reconstruction project may not become union members and can exercise the right to request a sale, but in redevelopment, once the project is promoted, all owners in the area are compulsorily granted union membership.

The two projects also differ somewhat in tenant housing measures and compensation. In reconstruction, handling is done individually according to lease contracts between parties, while in redevelopment, tenants are given the right to move into public rental housing within or near the area or are paid housing support funds.

However, maintenance projects are not limited to redevelopment and reconstruction. Recently, issues such as insufficient tenant housing measures or excessive full demolition in redevelopment and reconstruction projects have been continuously raised. In response, the government has expressed its intention to reform maintenance projects, which are concentrated on redevelopment and reconstruction, by strengthening street housing maintenance projects in the recently announced December 16 real estate measures.

Additionally, regional housing association projects, where residents within the same local government form a union, purchase land in an area, and bear construction costs to build housing, can be considered similar in nature to maintenance projects.