Gangnam Area Remodeling Complexes Face Regulatory and Internal Conflicts Setbacks

Remodeling projects in the Gangnam area of Seoul are facing setbacks due to strict regulations and internal conflicts. There are voices calling for a shift to reconstruction, which requires more time and cost.

Seoul Gangnam-gu Gaepo-dong Daechi 2 Complex view / Photo by Asia Economy DB

According to the maintenance industry on the 18th, Daechi 2 Complex in Gaepo-dong, Gangnam-gu, will hold a meeting with owners at the end of this month under the pretext of normalizing the maintenance project. Discussions will include dismissing the current remodeling association president and shifting the direction to reconstruction.

Daechi 2 Complex was completed in 1992 and consists of 11 buildings with up to 15 floors and 1,758 households. With a floor area ratio of 170%, it was planned to be reborn as a maximum of 18 floors and 1,988 households through vertical extension remodeling. In February last year, a consortium of Hyundai Engineering & Construction and Hyundai Engineering was selected as the preferred construction negotiator.

However, in September of the same year, the vertical extension method was judged unsuitable, and in June this year, the association lost a lawsuit after terminating contracts with the former contractors DL E&C and HDC Hyundai Development Company. The court ruled that the association must pay a total of about 11.2 billion KRW in compensation.

As a result, some residents continue to argue that the project should shift to reconstruction. A construction industry official explained, "The floor area ratio, which determines project feasibility for Daechi 2 Complex, is ambiguous, so the dilemma between remodeling and reconstruction may deepen." However, considering costs and other factors, it is expected that switching to reconstruction will not be easy.

In Jamwon-dong, Seocho-gu, the Dong-A Apartment's remodeling project has also been stalled. The plan to make the existing first floor a pilotis and add one floor at the top was blocked. The complex received a safety diagnosis grade of C, allowing only horizontal extension. Meanwhile, the Seoul city government judged the association's plan as vertical extension, requiring a change in the project plan.

Jamwon Hanshin Royal, a demonstration complex applying vertical extension remodeling technology, is also facing difficulties. It recently received an unsuitable judgment in the second safety review for vertical extension. Among residents, opinions are divided between reapplying for a safety review and liquidating the association.

The remodeling industry said that although complexes aiming to promote remodeling projects are emerging occasionally considering the degree of aging and project speed, progress is difficult due to the government’s favorable stance only toward reconstruction projects amid the economic downturn.

An industry insider said, "Recently, Seokwang Apartment in Samseong-dong actively held a general meeting to establish a remodeling association and elected an association president," adding, "However, the government is easing regulations related to detailed safety inspections for reconstruction and even considering increasing the floor area ratio for complexes already around 200%, while applying strict standards to remodeling, making market revitalization difficult."