"Redevelopment Rush Before 30% Rental Rate Is Reached..."

If the project implementation approval application is not submitted by the 23rd of next month,
the mandatory rental housing ratio will increase

Years of resident conflicts in Sindorim 293
90% consent rate through agreement... Accelerating project promotion

Hannam 2, Heukseok 11, and others also making swift progress

[Asia Economy Reporter Lee Chun-hee] With about a month left before the mandatory rental housing ratio for redevelopment projects is increased, major redevelopment districts in Seoul are accelerating their projects to avoid the new requirements. In this process, some areas are hastening project promotion by resolving long-standing conflicts among residents.

According to industry sources on the 14th, the 'Promotion Committee' and the '(Integrated) Residents' Representative Council' of the Sindorim Urban Environment Improvement Project (Sindorim 293) in Guro-gu, Seoul, recently agreed to cooperate for smooth project progress. This project is being promoted under the 'landowners' system, which allows project implementation approval with the consent of 75% of owners without establishing a union. However, due to conflicts between the two groups, the project had seen little progress for years without securing union member consent.

As a result of combining the consent forms secured by the two organizations through this agreement, about 830 out of 930 total owners are reported to agree with the project. With a consent rate reaching 90%, smooth project promotion has become possible. A landowner in the district said, "Concerns that mandatory rental housing would increase if the project is delayed seem to have led residents to reach an agreement."

The change in the stalled project's atmosphere was triggered by the government's amendment to the Enforcement Decree of the 'Urban and Residential Environment Improvement Act.' The revised decree, effective from the 24th of next month, raises the mandatory rental housing construction ratio for redevelopment projects in the metropolitan area to the legal maximum of 30%. Currently, the basic mandatory ratio is 15%, but local government heads may increase it by up to 5 percentage points if there are many tenants in the district. In Seoul, redevelopment projects are required to supply rental housing at a level of 15-20% during the permit process.

However, from September, the basic ratio will increase to 20%, and the discretionary ratio will expand up to 10 percentage points. For redevelopment projects in Seoul, if the project implementation approval is not applied for by the 23rd of next month, the mandatory rental housing ratio will increase to a maximum of 30%. Seoul City plans not to uniformly apply the 30% ratio, considering the possibility of project abandonment due to deteriorating profitability, but it will be difficult to avoid the increase in rental housing ratio, putting redevelopment sites under urgent pressure. Currently, the rental housing ratio for the Sindorim 293 project is about 18.5%, with 239 rental units and 264 long-term lease units out of a total of 2,722 planned units.

Large Redevelopment Projects like Hannam 2 and Heukseok 11 Also Rush to Prepare for Project Implementation Approval

Perspective view of Hannam 2 District Block 2-1, Yongsan-gu, Seoul (Provided by Seoul City)

Hannam 2 district in Yongsan-gu and Heukseok 11 district in Dongjak-gu are in similar situations. On the 11th, Hannam 2 district passed the architectural review after a reattempt. The architectural review is a procedure that examines urban aesthetics and public interest, considered the last hurdle before obtaining project implementation approval. Once the architectural review is completed, major obstacles are removed.

A union official said, "We were worried because Hannam 3 district passed the architectural review only after seven attempts, but Hannam 2 passed quickly," adding, "We will expedite the project implementation approval application process." Currently, the rental housing ratio in Hannam 2 district is 15.5%, with 238 rental units out of 1,537 total units.

Heukseok 11 district in Dongjak-gu completed the architectural review in June and plans to hold a general meeting on the 29th to obtain project implementation approval, with the application expected to be submitted by mid-next month. The rental housing ratio here is set at 17.0%, with 257 rental units out of 1,509 total units.

Both locations are considered prime sites adjacent to Gangnam, so competition for orders is expected to be fierce. Companies are likely to compete by promoting their recently strengthened premium brands. In fact, Hannam 3 district near these projects recently selected Hyundai Construction as the contractor and confirmed the project under the name 'The H Hannam,' while Heukseok 7 district was completed in 2018 as Daelim Industrial's 'Acro River Heim.' Heukseok 11 district, which plans to complete contractor selection within this year, is likely to see participation from Daewoo Construction and HDC Hyundai Development Company, with other major construction firms also weighing their involvement.