"Saved 200 Million Won in Contributions"... Remodeling Complex Smiles Despite Construction Cost Increases

Seoul Gangdong-gu Dunchon-dong 'The Sharp Dunchon Foret'
3 Buildings, 74 Units Newly Built for General Sale
Sale Revenue Expected to Reduce Shared Costs
First Priority Subscription Fully Booked from 11th to 13th 'Successful Launch'

#On the 13th, the construction site of ‘The Sharp Dunchon Foret’ in Dunchon-dong, Gangdong-gu, Seoul was visited. While five buildings of Dunchon Hyundai 1st Apartment were being remodeled, three new apartment buildings were being constructed simultaneously. The 74 units of these new apartments received subscription applications from the 11th to the 13th, showing a highest competition rate of 155.33 to 1. Although the association decided to increase construction costs last year, it expected that additional contributions would not significantly increase due to funds raised through general sales.

Amid disputes arising from increased construction costs in recent housing maintenance projects, ‘remodeling projects with general sales units’ have emerged as an alternative solution to resolve conflicts. The industry explains that the increased construction costs can be partially covered by sales revenue, resulting in reduced contribution burdens.

According to the industry on the 14th, the construction cost for The Sharp Dunchon Foret remodeling project rose to about 6.69 million KRW per 3.3㎡ (pyeong). This amount reflects last year’s increases in raw material prices and labor costs, agreed upon by the association and the contractor, POSCO E&C. The total contribution amount for the 498 units in the association is approximately 130 billion KRW. Each association member household is expected to bear about 260 million KRW.

Originally, the contribution per association member was higher. The association reduced the contribution to the 200 million KRW range by increasing the number of general sales units. From the design stage, the association decided to construct three additional buildings (15th to 17th) separately from the remodeling of the existing five buildings (10th to 14th). Subsequently, 74 units in these three buildings were offered for general sale.

In particular, the general sales units in buildings 15 and 16 were placed between buildings 12 & 14 and 10 & 12 respectively, and building 17 was located at the edge of the complex between buildings 13 & 14, allowing them to be mixed with existing association member buildings. As a result, a total of 4,374 applicants applied for the general sales subscription, with an average competition rate of 93.06 to 1, closing at the first priority. The highest competition rate was for the 84㎡B type, at 155.33 to 1. The sale price was set at the high 1.3 billion KRW range for the exclusive area of 84㎡, and the high 1.6 billion KRW range for 112㎡.

Construction site of 'The Sharp Dunchon Foret' in Dunchon-dong, Gangdong-gu, Seoul. Photo by Seoul Remodeling Housing Association Council

An industry insider said, "While the increased floor area ratio from remodeling could be used to expand the floor area per association member unit, The Sharp Dunchon Foret adopted a strategy to increase the number of general sales units to reduce the contribution burden."

The Sharp Dunchon Foret is the first case in Korea among remodeling projects to have more than 30 general sales units. Generally, remodeling projects proceed on a one-to-one basis where the number of units remains the same. Remodeling complexes including general sales such as ‘Ogeum Anam’ and ‘Songpa Seongji’ in Songpa-gu, Seoul, allocated fewer than 30 general sales units to avoid the application of the price ceiling system.

The Sharp Dunchon Foret also improved residential conditions through remodeling. By securing space in front and behind the complex, the actual usable area per unit expanded from 84㎡ to 93?95㎡. Two underground floors were newly added for parking, increasing parking spaces by 335 (from 368 to 703). Community facilities such as a fitness club, indoor golf practice range, sauna, library, book caf?, and kids’ room were arranged mainly in the new buildings.