Increasing Costs Due to Construction Halt... Dunchon Jugong Association Members Face Additional Burden of 180 Million Won Each

Construction Consortium Requests Contract Amount Change of Approximately 4.3677 Trillion Won
Association to Approve Consortium's Request at General Meeting on 15th Next Month

View of the Dunchon Jugong reconstruction site in Gangdong-gu, Seoul. / Photo by Mun Ho-nam munonam@

[Asia Economy Reporter Noh Kyung-jo] The Dunchon Jugong reconstruction project (Olympic Park Foreon) in Gangdong-gu, Seoul, managed by the union, has been halted for over five months, resulting in an additional cost burden of approximately 2 billion KRW per union member.

According to the real estate industry on the 20th, the Dunchon Jugong construction consortium (Hyundai Engineering & Construction, HDC Hyundai Development Company, Daewoo Engineering & Construction, Lotte Engineering & Construction) recently requested the union to approve a revised construction contract amounting to 4.36775681 trillion KRW (excluding VAT).

This amount is about 1.1 trillion KRW higher than the original construction cost of 3.2 trillion KRW. The initial construction cost for the Dunchon Jugong reconstruction project was around 2.6 trillion KRW but was increased to approximately 3.2 trillion KRW in June 2020.

The halt in construction was also caused by the increase in construction costs. After conflicts between the union and the construction consortium, work was suspended as of midnight on April 15. Both parties reached an agreement to resume construction on the 11th of last month.

Subsequently, the consortium cited increased raw material costs and losses incurred during the suspension period as reasons to request an additional 1.1 trillion KRW increase.

Considering there are about 6,100 union members, the additional construction cost burden per person amounts to approximately 180 million KRW. The consortium explained that if the general sale price rises to 35 million KRW per 3.3㎡, the burden per union member could decrease.

In a message sent to union members yesterday, the union executive stated, "According to the agreement, the union must submit the loss compensation amount and construction period extension details prepared by the consortium to the verification agency as is," adding, "The union has requested the Korea Real Estate Board to verify the construction costs through the Project Normalization Committee and the Normalization Task Force Team (TFT) meetings."

The union plans to hold a general meeting on the 15th of next month to approve the consortium's request. Following the verification results from the Real Estate Board, individual contributions and the expected completion date will be finalized.

Meanwhile, the Dunchon Jugong reconstruction project is known as the "largest reconstruction project since the founding of Dangun," involving the demolition of 5,930 households and the construction of 12,032 households across 85 buildings with a maximum height of 35 floors above ground.