Remodeling Wave in the Seoul Metropolitan Area... Suji Hyundai and Others Establish Associations One After Another

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[Asia Economy Reporter Onyu Lim] Remodeling associations are being established one after another in the Seoul metropolitan area, including Yongin. There is a growing interest in aging mid-rise complexes with high existing floor area ratios, which have low feasibility for reconstruction projects.

According to the maintenance industry on the 13th, Yongin City approved the establishment of a remodeling association for Hyundai Apartment in Pungdeokcheon-dong, Suji-gu on the 11th. The establishment of a remodeling association is possible if two-thirds of all owners and more than half of the owners in each building agree.

This complex, completed in 1994 with 1,168 households, is a 15-story mid-rise apartment with an existing floor area ratio of 210%, actively pursuing remodeling. A representative from nearby A Real Estate Office said, "Large construction companies such as Lotte Construction and GS Construction are actively competing for the construction rights by putting up banners." According to the brokerage industry, as remodeling efforts have intensified, the price of an 84㎡ (exclusive area) unit, which was 600 million KRW a year ago, has risen to 880 million KRW.

In Suji-gu, Yongin, the remodeling association for Seongbok Station River Park in Sanghyeon-dong was also established on December 30 last year. This complex, completed in 1998, also chose remodeling due to its high floor area ratio with a maximum of 20 floors. The plan is to increase the number of households from 702 to 807 through horizontal and annex expansions.

Accordingly, the number of remodeling associations established in the Suji-gu area has increased to seven. This contrasts with 2019, when there was only one at the entrance of Pungdeokcheon-dong. As the government’s strict regulations on reconstruction projects continue, it is analyzed that more complexes are choosing remodeling, which is relatively less regulated. Reconstruction has become difficult to pass safety inspection standards even after exceeding the standard age of 30 years, receiving grades D (conditionally allowed) or E (poor), whereas remodeling can be pursued if the building is over 15 years old. For structural (frame) safety inspections, vertical expansion is possible if the maintenance grade (A~C) is B or higher, and horizontal expansion is possible if it is C or higher.

According to the Korea Remodeling Association, the number of complexes in the metropolitan area that have received or are scheduled to receive remodeling association establishment approval increased from 37 (23,935 households) at the end of December 2019 to 54 (40,551 households) at the end of December last year. Researcher Yeolmae Kim of Eugene Investment & Securities analyzed, "Remodeling can be an alternative for complexes where reconstruction feasibility is reduced due to floor area ratio restrictions."

Construction companies are also actively pursuing project orders. Hyundai Construction formed a dedicated remodeling organization within its housing business division in December last year and has been expanding related design and sales personnel.