"HDC Hyundai Development, 'Fulfill at Least Some Benefits'... Last-Minute Negotiations by Hakdong District 4 Redevelopment Association Members"

Proposed 14 Benefits to Retain Construction Rights
Raised Construction Costs Without Benefits, Citing Inflation
Promotion Team: "Home Appliances and Payment in Kind Must Be Guaranteed"
Hyundai Development: "Already Decided at the General Me

Overview of redevelopment in Hakdong District 4.

As the Hakdong District 4 redevelopment project prepares for a general meeting with the goal of breaking ground within this year, some union members are engaged in last-minute negotiations, demanding that the construction company guarantee part of the benefits it initially proposed, citing its responsibility to fulfill its social obligations. These union members argue that even partially restoring the benefits proposed by the construction company would help minimize the losses to union members resulting from increased construction costs. However, the construction company maintains that the matters have already been decided at the general meeting and refuses to accept any further discussion.

According to an Asia Economy report compiled on October 7, the Hakdong District 4 Redevelopment Fast-Track Task Force recently requested HDC Hyundai Development Company (Hyundai Development) to honor some of the terms it had first proposed in June 2022.

Previously, in 2021, Hyundai Development was responsible for a building collapse during demolition work for the Hakdong District 4 redevelopment, resulting in 17 casualties. Following this disaster, there was a movement to replace the construction company, and Hyundai Development proposed various benefits in order to retain its construction rights.

The terms proposed by Hyundai Development in June 2022 included: a construction cost of 5,085,000 won per pyeong with no margin; no additional construction costs after actual groundbreaking; a 10 million won move-in support payment per household; all finishing materials and appliances to be domestic or imported; and 100% compensation in kind in the event of unsold units, among 14 items. The clause also specified that construction costs would be agreed upon by applying the inflation rate until actual groundbreaking.

However, in September last year, Hyundai Development abruptly demanded a construction cost of 6,980,000 won per pyeong, citing rising raw material and labor costs. After nearly ten months of negotiations with the union, the final amount was set at 6,198,000 won per pyeong in June this year, on the condition that benefits such as move-in bonuses and home appliances would be canceled.

In addition, an official letter sent by Hyundai Development to the union stated that compensation in kind for unsold units would be "possible" only if the initial general sales price was applied, and that if construction did not begin within this year, the agreement on increased construction costs would become void. The task force believes that Hyundai Development, which had previously declared in June 2022 that it would "maximize union members' benefits through genuine compensation in kind," has now added the condition of "possible," potentially shifting the risk of unsold units onto the union itself.

Even if the task force's requests are not reflected in the general meeting scheduled for the 19th, they argue that the construction company must at least guarantee the move-in bonuses, home appliance benefits, and compensation in kind for unsold units. The task force estimates that the cancellation of these benefits could result in losses of approximately 150 million won per union member.

For this reason, the task force recently inquired about these issues with Hyundai Development, but only received the response: "The construction cost, including the cancellation of benefits, was negotiated with the union, and if union members had rejected the construction cost at the general meeting, further discussions could have taken place. At this point, it is not possible."

A task force representative stated, "The project has been delayed by five years due to the demolition collapse accident. Most of the core benefits initially proposed by Hyundai Development have disappeared, leaving only empty promises," and added, "This is an abuse of a large corporation's dominant position to intimidate victims and retract important agreements." The representative called for the fulfillment of the demolition collapse accident settlement agreement.

Meanwhile, repeated attempts to contact Hyundai Development for comment were unsuccessful.