Customized Remodeling for Complexes Where Reconstruction Is Difficult... Enhancing Apartment Asset Value [Real Estate AtoZ]

Maintaining Structural Frames, Upgrading Parking Connections and Community Facilities
Samsung C&T Forms Partnerships with 12 Complexes
Hyundai E&C Pursues Residential Improvements Without Resident Relocation
"Need for Project Financing Solutions and Special Remodeling Exemptions"

Major construction companies such as Samsung C&T and Hyundai Engineering & Construction are seeking new business opportunities by launching customized remodeling projects to improve the residential environment of older apartment complexes that have not yet reached the legal threshold for reconstruction.

Overview of Samsung C&T's Next Remodeling Business. Samsung C&T

Samsung C&T is promoting its "Next Remodeling" project, which upgrades the residential performance of existing buildings to the level of newly built apartments while maintaining the original structures. In September, the company signed partnerships with 12 apartment complexes completed in the early to mid-2000s in cities including Seoul, Busan, Daegu, and Gwangju.

The Next Remodeling project replaces everything except the structural frame, without demolition or expansion, and introduces advanced systems and residential services. By upgrading the exterior, landscaping, and community facilities, the project transforms old apartments into next-generation residential complexes. Since the existing structure is utilized, there is no need for time-consuming frame construction, which not only reduces high-risk work but also allows completion within two years-a significant advantage.

In June, Hyundai Engineering & Construction signed a "new business" agreement with Hills State Complex 2 in Samseong-dong, which is 18 years old, to create a premium residential complex and is currently working on improving the living environment of aging complexes. For complexes where reconstruction or expansion-type remodeling is not feasible, the company is carrying out projects to upgrade community facilities, exteriors, multi-family housing management and control systems, parking lots, landscaping, equipment, elevators, and branding.

For common areas, the upgrades include not only the exterior walls, main entrances, landscaping, and community spaces, but also the application of advanced technologies such as underground parking systems, electric vehicle fire prevention equipment, and smart access control. Residents do not need to relocate, and features such as noise-reducing floor structures, high-performance windows, and energy-saving equipment can be installed for households that request them.

Perspective view of the exterior improved through Hyundai Engineering & Construction's Hi-Live project. Hyundai Engineering & Construction

Compared to 20 or 30 years ago, consumer expectations for residential spaces have risen significantly, and changes in residential and lifestyle patterns have led to the pursuit of large-scale, customized remodeling projects. These include expanding and repurposing community and welfare facilities, increasing parking capacity, and building connections between buildings and underground parking lots. In some high-end apartment complexes, resident representative councils have obtained the required approval-more than two-thirds of residents-for remodeling projects that include expanding community facilities. For parking expansion, some complexes with available space are considering building separate parking towers as part of their remodeling plans.

While traditional residential environment improvement projects such as reconstruction and remodeling are subject to the "Urban and Residential Environment Improvement Act" and the "Housing Act," which require lengthy procedures, customized remodeling projects fall under the "Multi-Family Housing Management Act." In this model, the resident representative council implements the project, while the construction company handles design, administration, construction, and after-sales service. The project is expected to take less than two years. Since there is no frame construction, which usually takes up a significant portion of the construction period, high-risk work is reduced and completion within two years is possible.

Given the considerable costs involved, some point out that to apply these projects to a larger number of aging multi-family housing complexes nationwide, beyond a few luxury complexes, more effective ways to secure project financing are needed. Large-scale customized remodeling often goes beyond the scope of standard long-term maintenance plans. In such cases, existing reserves are insufficient, and owners may be required to pay additional costs. Differences in owners' ages, financial situations, subjective assessments of the necessity of remodeling, and patterns of facility use can make it difficult to secure the required level of consent.

Projects such as rebuilding, reconstruction, major repairs, expansion, and addition often exceed the scope of permitted activities and may require time-consuming and costly urban planning changes. For district unit plans, the scope of "minor changes" is defined to allow relatively easy and quick modifications for less significant matters. However, after the initial establishment, only changes within 10% of the floor area ratio (FAR) are considered minor. If the FAR has already been changed close to 10% through minor modifications, further changes may require the "major change" process, which involves review by the city or county urban planning committee.

Lee Taehee, a research fellow at the Construction & Economy Research Institute of Korea, explained, "For the remodeling of community and welfare facilities carried out long after completion, it may be necessary to provide special exemptions, such as allowing expansions within a certain range-say, up to 5%-to be treated as 'minor changes,' regardless of previous FAR changes in the district unit plan."