"Reconstruction of 1st Generation New Towns, Construction to Start in 3 Years?" Industry's Uneasy Outlook [Real Estate AtoZ]

Ministry of Land, Infrastructure and Transport: "1st Generation New Towns, 1 Year Relocation and Demolition, 2 Years Construction... Move-in by 2030"
Industry: "2 Years Construction Period is Practically Impossible"... LH Apartments Also Have About 3 Years Construction Period
"Residents Have Different Living Environments, Simultaneous Relocation is Also Difficult"

The industry is casting doubtful eyes on the government's plan for the first phase of new town reconstruction lead districts to start construction in 2027 and move-in by 2030. The periods for relocation, demolition, and construction are set too short, leading to forecasts that the move-in schedule will be delayed by at least 1 to 2 years compared to the target. Real Estate AtoZ examined the industry's reactions to the government's goals.

Apartment complex in Bundang-gu, Seongnam-si, Gyeonggi-do.
Photo by Yonhap News

Ministry of Land, Infrastructure and Transport: "Construction in 2027, Move-in Possible by 2030"… Industry Responds "Well..."

On the 22nd, the Ministry of Land, Infrastructure and Transport (MOLIT) announced the 'Plan for Selecting Lead Districts in the First Phase New Towns,' aiming for construction to start in 2027 and move-in by 2030. When lead districts of around 26,000 households are selected this November, they plan to establish special maintenance plans and implementation plans to achieve these goals. A MOLIT official stated, "Relocation and demolition are included in the construction period," adding, "If relocation and demolition proceed for one year starting in 2027 and apartment construction takes two years, move-in by 2030 is possible."

The industry views this plan as impossible. A representative from Construction Company A said, "It is very difficult to complete relocation, demolition, and start construction within three years during reconstruction," adding, "Usually, relocation and demolition are not included in the construction period. Relocation and demolition take 1 to 2 years, and actual construction takes about 3 years." He continued, "Resident consent rates are crucial in reconstruction, but achieving 100% consent is practically impossible, so relocation alone can take a long time," and added, "Especially in the first phase new town maintenance projects, which involve integrated reconstruction, many residents must relocate, making relocation and demolition within one year difficult."

A representative from Construction Company B said, "Even if relocation and demolition are completed within one year, matching the apartment construction period to two years is nearly impossible." He added, "If the two years include three winters, the construction period will inevitably be extended," and further noted, "Moreover, the first phase new town maintenance projects involve integrated reconstruction of multiple complexes, increasing the likelihood of longer construction periods."

A view of a reconstruction construction complex in Seoul city.
[Photo by Yonhap News]

Looking at the time taken by Korea Land and Housing Corporation (LH) to build apartments, it often exceeds two years. According to LH, the apartment project at Guri Galmae Station Area A-1BL, for which bidding closed on February 28, has a construction period of 1,059 days. LH's construction periods are based on actual construction start dates without including relocation and demolition.

MOLIT to Announce Relocation Measures in the Second Half, but "Preparing Relocation Measures is Not Easy"

MOLIT said it would announce relocation measures in the second half of the year, but difficulties in preparing these measures may disrupt the goal of starting construction in 2027. Since the first phase new town maintenance projects involve integrated reconstruction, the volume of residents relocating is large. The lead district alone is about 26,000 households. Researcher Eunhyung Lee of the Korea Construction Policy Institute explained, "The government inevitably finds it difficult to prepare relocation measures," adding, "Each resident lives in different environments and houses of varying sizes. It is practically impossible for all these people with different living conditions to relocate simultaneously."

MOLIT plans to distribute a standard association charter to address relocation delays. In complex reconstruction projects, some residents deliberately delay relocation. MOLIT believes that including provisions in the standard charter provided as guidelines to associations to claim damages for intentional relocation delays will allow associations to utilize this tool.

However, there are criticisms that even if such a standard charter is distributed, it will be difficult to apply it in practice on the ground. Researcher Lee said, "Including provisions to claim damages for intentional relocation delays in the charter is a statement from the developer's perspective," adding, "If residents who do not relocate in the widely conducted first phase new town maintenance projects are forced to pay damages, residential gentrification issues may arise." He further explained, "If residential gentrification issues escalate, the momentum for promoting maintenance projects will ultimately decline."