[Reporter’s Notebook] Dunchon Jugong Heading Toward Catastrophe... There Are No Winners in This Fight

The Dunchon Jugong Reconstruction Complex in Gangdong-gu, Seoul, the largest reconstruction project to date, is facing a construction halt crisis. As conflicts over project costs between the association and the construction companies reach a peak, the Dunchon Jugong Construction Consortium (including Hyundai Engineering & Construction and three other companies) has announced a construction stoppage starting from the 15th. The photo shows the reconstruction site on the 14th. Photo by Hyunmin Kim kimhyun81@

[Asia Economy Reporter Kim Hyemin] The reconstruction of Dunchon Jugong in Seoul, involving the construction of over 12,000 households, is heading towards a catastrophe. The conflict between the union executive and the construction consortium has ultimately halted the construction work that had been ongoing for three years. The situation is worsening. As the union took the drastic step of terminating the contract, the construction consortium began dismantling 57 tower cranes. It is truly a precarious situation, with the wounds about to fester and burst.

The conflict began over construction costs. It is the result of an unyielding battle between the new union executive and the construction consortium over the validity of the contract to increase construction costs made two years ago with the former union president. However, looking beneath the surface, there are internal conflicts within the union, the pre-sale price ceiling system regulated by the Moon Jae-in administration, and various complex issues encountered during the reconstruction process all mixed together. This tangled knot is not easily untied.

The problem is that the longer the conflict drags on, the more the damage snowballs. Both sides are aware of this. Union members must bear the increasing contributions as construction delays continue. If the construction consortium fails to extend the maturity of relocation and project loans they guaranteed, the financial debt will also fall squarely on them. The construction consortium is also facing management difficulties as the construction period lengthens. From the standpoint of securing construction rights for other reconstruction complexes, the more the conflict with the union becomes public, the worse it is for their external image.

As the Dunchon Jugong crisis prolongs, the sighs of applicants waiting for pre-sale grow heavier. The Yoon Suk-yeol administration, which was launched on the promise of stabilizing housing prices, must seriously consider the delay in pre-sales in Seoul’s key supply areas. It is the role of local governments and the central government to continuously propose exit strategies to the union and construction consortium, who remain sharply opposed without compromise.

The union and the construction consortium must not be left to let the court resolve the current conflict. There needs to be at least a minimal consensus that litigation could be the worst-case scenario for all stakeholders. If this issue is resolved well, it could become a model case of reconstruction that wisely solves a high-level equation. Can the reputation of the country’s largest reconstruction complex be proven in this way?