Strong Aftermath of HDC Hyundai Development Collapse Accident... Long-term Drift Feared for Both Residential and Non-residential Properties

Sale of Hong-eun 13 District, Projects Near Gongneung and Kwangwoon University Stations, etc.

On the 19th, officials from the Ministry of Employment and Labor and the police moved seized items after completing a search of the HDC Hyundai Development Company headquarters in Yongsan-gu, Seoul, in connection with the collapse accident at Hwajeong I-Park in Seo-gu, Gwangju. Photo by Mo Honam munonam@

Concerns are growing about the potential derailment of development projects involving HDC Hyundai Development Company (HDC Hyundae Industrial Development, Hyunsan) across the country. Following the exterior wall collapse accident at Gwangju Hwajeong I-Park, there are talks about the possibility of Hyunsan being expelled from the construction industry. Due to the decline in trust toward Hyunsan as the apartment contractor, it seems inevitable that the schedules for complexes planned for sale in the first half of the year will be delayed to some extent. It is difficult for development project stakeholders and sales complexes to avoid direct or indirect damage.

Hyunsan was scheduled to break ground this year on several projects including the Kwangwoon University Station area development, Yongsan Railroad Hospital site development, Gongneung Station area development, and Gimhae Data Center project. However, with the possibility of a business suspension lasting up to 1 year and 8 months and even deregistration being discussed, all projects appear to be plunging into uncertainty. Local governments in each project area are closely monitoring the administrative sanctions against Hyunsan and are on high alert for their repercussions.

The same applies to complex development projects in which Hyunsan is participating as part of a consortium, such as the Jamsil Sports and MICE (Meetings, Incentives, Conferences, and Exhibitions) complex space creation project (Jamsil MICE project) and the Cheongna Medical Complex Town in Incheon. While Cheongna Medical Complex Town has at least been selected as the final project operator, the Jamsil MICE project is only selected as the preferred negotiation partner, making it particularly precarious. Depending on the severity of the administrative sanctions, there is also the possibility that this status could be revoked.

A local government official said, "We need to consider the impact of administrative sanctions on the status of the project operator and contractor," adding, "For now, we will wait for the sanction results, and even if there are no issues, it will not be easy to push the project forward immediately due to public opinion."

On the 19th, officials from the Ministry of Employment and Labor and the police conducted a search and seizure at the headquarters of HDC Hyundai Development Company in Yongsan-gu, Seoul, in connection with the collapse accident at Hwajeong I-Park in Seo-gu, Gwangju. Scene from the day. / Photo by Moon Honam munonam@

The complexes that Hyunsan has won bids for and are about to be sold are expected to face disruptions in their sales schedules. According to the I-Park sales calendar, the ‘Hong Eun 13 District I-Park (tentative name)’ in Seodaemun-gu, Seoul, was scheduled for sale in February. After three changes of contractors, Hyunsan was selected as the contractor for Hong Eun 13 District in 2020. If everything went according to plan, sales would have started next month, and move-in should begin by the second half of next year at the latest.

However, since the disciplinary level against Hyunsan has not yet been decided, uncertainty about the project itself has increased, making it possible that sales will be postponed. A representative from a real estate agency in Hong Eun-dong said, "I understand that the association is discussing postponing the sales schedule due to the overlapping issues of pricing and the Hyunsan situation."

An industry insider said, "It is questionable whether the district office, which holds the permit authority, will approve the sales before the disciplinary level against Hyunsan is finalized," adding, "With the decline of the I-Park brand and damage to the company’s image, it will also be difficult to secure collective loans for interim payments guaranteed by the contractor."

The situation is the same for Suwon I-Park City and Imun 3 District housing redevelopment areas, which are scheduled for sale in March and April, respectively. Depending on Hyunsan’s future status, sales schedules may be pushed back, and delays in move-in due to postponed sales have become inevitable. There are concerns that confusion may arise as prospective residents who coordinated their lease contract schedules with the sales plans may face disruptions.