GS Construction, the contractor of the Maple Ja-i Apartment in Seocho-gu, Seoul, which is scheduled for occupancy in June, has demanded an additional construction cost of 485.9 billion KRW from the union, and has taken legal action over 257.1 billion KRW of this amount.
According to the construction industry on the 10th, GS Construction filed a lawsuit at the Seoul Central District Court in December last year, demanding the Shinpangpo 4 District Reconstruction (Maple Ja-i) union to pay an additional construction cost of 257.1 billion KRW reflecting price increases and other factors.
The amount includes ▲ 96.7 billion KRW reflecting construction cost changes due to changes in the construction environment ▲ 77.7 billion KRW in financial costs due to increased contributions caused by a decrease in the number of general sale units ▲ 31.0 billion KRW due to price increases before construction started.
GS Construction requested the union to pay the increased amount, but the union refused, leading to a lawsuit. However, GS Construction has requested mediation from the Seoul Metropolitan Government, leaving open the possibility that the issue of increased construction costs may be resolved without litigation depending on the mediation results.
Separately, GS Construction has also demanded an additional construction cost of 228.8 billion KRW from the union for design changes and specialized work, and has requested verification of the appropriateness of this amount from the Korea Real Estate Board. In total, the additional construction costs demanded by GS Construction from the union amount to 485.9 billion KRW.
Maple Ja-i is a large-scale apartment complex project with 3,300 households, developed through the reconstruction of Shinpangpo 4 District in Jamwon-dong, Seocho-gu, Seoul.
GS Construction won the project in October 2017 at a construction cost of 4.99 million KRW per 3.3㎡, but has requested increases three times so far due to rising construction costs caused by external environmental changes such as the COVID-19 pandemic and the Russia-Ukraine war.
In January last year, the construction cost was raised to 5.45 million KRW per 3.3㎡, and in April to 5.64 million KRW. If the additional construction cost currently demanded is also reflected, the construction cost will rise to 7.97 million KRW.
The previously increased construction costs were accepted after negotiations with the union, but the union is reportedly taking a firm stance and rejecting the current demand.
In the maintenance industry, since Maple Ja-i’s occupancy is scheduled for June, if GS Construction and the union fail to reach an agreement, it is expected that there may be disruptions to the residents’ move-in, and it could also affect more than 10,000 households in the nearby area.
A GS Construction official stated, "Construction costs have risen sharply due to external factors such as COVID-19 and the Russia-Ukraine war," adding, "In particular, the increased contributions due to the decrease in the number of general sale units are not GS Construction’s responsibility."
He continued, "We are seeking the best solution through amicable consultations with the union and hope to find a resolution before the occupancy in June."
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