Dunchon Jugong, Construction Resumption as Early as November... Final Agreement Between Association and Construction Team

The Dunchon Jugong union and the construction business group have agreed on 8 out of 9 major issues. The 8 agreed clauses are ▲ re-verification of the existing construction cost increase ▲ review of the sale price ▲ general sales and union member sales ▲ design and contract changes ▲ verification ▲ general meeting resolution ▲ resumption of construction ▲ effectiveness of the agreement and responsibility in case of violation. However, since there is a disagreement regarding the commercial dispute, more time is expected before construction can resume. A view of the Dunchon Jugong reconstruction site in Gangdong-gu, Seoul on the 7th. Photo by Moon Honam munonam@

[Asia Economy Reporter Kim Hye-min] Reconstruction work for the Dunchon Jugong Apartments in Gangdong-gu, Seoul is expected to resume as early as November.

The Seoul Metropolitan Government announced on the 11th that the Dunchon Jugong Apartment Reconstruction Association and the construction consortium (Hyundai Engineering & Construction, HDC Hyundai Development Company, Daewoo Engineering & Construction, Lotte Engineering & Construction) have reached a final agreement on the plan to resume construction.

The Dunchon Jugong reconstruction project had been halted for nearly four months due to conflicts between the association and the construction companies.

The agreement reached on this day was based on Seoul City's mediation proposal and included specific revisions to the wording of clauses related to the previously unresolved 'commercial facility dispute.'

The construction consortium had taken the stance that no agreement could be reached unless the issue of commercial facility retention rights was resolved. Eventually, the association's executive committee threatened to cancel the approval of the Integrated Commercial Facility Management Committee if there was no progress in negotiations with the existing construction project management (PM) company, REITs In Holdings, by the 15th, which accelerated the negotiations.

The agreement document reflects the construction consortium's position, stating that "within 60 days from the date of agreement, all general meeting agendas related to commercial facilities approved after April 2021 shall be canceled, and resolutions regarding disputes between PM companies shall be made."

With this agreement, the loan period for the 700 billion KRW project financing, which matures on the 23rd, is also expected to be extended by six months. The association sent a letter on the 4th requesting cooperation and extension of the loan period to the construction consortium and the main lenders, and the consortium also requested a six-month extension from the main lenders on the 9th.

The association plans to appoint a new executive committee in October, hold a general meeting to resume construction, apply for approval of general sales in November, and hold a management disposition general meeting in December. If this proceeds as planned, general sales will be possible in January next year.