Land Prices Soar to 70 Million Won per Pyeong... "Sinwolgok 1 District" Undergoes a Complete Transformation

Kim Changhyun: "After a Decade of Stagnation, Demolition of the Red-Light District... Communication Was the Key"
"99.9% Relocation Rate Achieved in Two Years Through Cooperation With District Office"
Lotte Construction to Lead Construction... Ground

The last remaining large-scale red-light district in Seoul, "Mia-ri Texas," will close its 70-year history and be transformed into a luxury residential-commercial apartment complex. Just as the red-light district in front of Yongsan Station became "Raemian Yongsan The Central" and Cheongnyangni 588 was redeveloped as "Lotte Castle SKY-L65," Mia-ri Texas is also set to be reborn as a massive 47-story complex.

Kim Changhyun, chairman of the Sinwolgok 1 District Association, emphasized the importance of communication with association members. Provided by the association.

This area, which became the nation’s largest prostitution zone after the Korean War in the 1950s and 1960s, saw a redevelopment association established in 2009 as redevelopment momentum grew. However, the project stalled for a decade. The Sinwolgok 1 District redevelopment project gained significant traction after Kim Changhyun became the association head in 2019. Relocation began in October 2023, and the project has now achieved a 99.9% relocation rate, with construction scheduled to begin at the end of the second half of this year.

In a recent interview, Association Head Kim cited "communication" as the key to ending the 10-year stalemate. He said, "It is not easy to bring together people with different opinions and make them function as a single community," adding, "The core was persuading members of the association about the right direction for the project through communication and producing results."

The process was not always smooth. Kim said, "At first, I was attacked with illogical arguments," and noted, "I realized that the role of association head also requires flexibility." In 2021, there were even five general meetings in a single month: two organized by the association and three for recall motions. The emergency committee split into three factions, each holding its own recall meeting.

The biggest challenge was vacating and demolishing the red-light district. Kim emphasized, "Outsiders thought the project would be difficult because of the red-light district," and added, "It took two years, but the greatest achievement is that we worked closely with the Seongbuk District Office to resolve the red-light district issue."

Currently, only one household remains to be relocated. Kim stated, "Eviction orders have been issued, so we just need to execute them, but we are waiting a little longer to prevent any accidents and to reach an amicable agreement."

There were also conflicts during the compensation process. About 30 business owners and sex workers held protests in front of the district office. Since February last year, the association has been negotiating to provide additional compensation at 100-300% of the business rights value for each establishment. The district office also launched a program to support female victims of prostitution with up to 2.1 million won per month for 12 months to help them reintegrate into society.

As the project progressed, asset values soared. Land prices, which had dropped to 13 million won per 3.3 square meters (one pyeong) in 2017-2018, surged to nearly 70 million won per pyeong before the October 15 measures last year. Kim commented, "This shows that the evaluation can change completely depending on the progress of the association’s project."

The project covers a total floor area of 130,000 square meters, with construction costs well over 1 trillion won. The large complex will feature 2,201 apartment units and 170 officetels in a building with six basement levels and 47 above-ground floors. Public facilities such as a cultural park and a children's park will also be created.

A view of Sinwol-gok 1 District under demolition. Provided by Seongbuk-gu.

It was also remarkable that the association negotiated a 300 million won interest-free relocation incentive per member with Lotte Construction. Kim explained, "The construction company initially offered 200 million won, but we wanted to provide more benefits to our members, so we agreed on 300 million won. This was possible because the association’s executive team responded effectively." The construction consortium was originally formed by Lotte Construction and Hanwha Construction in a 6:4 ratio, but after Hanwha withdrew during construction cost negotiations in 2023, Lotte became the sole contractor.

The terms for relocation loans were also favorable. Through Daegu Bank, the association secured a preferential rate for members, applying a 0.59% spread over the six-month COFIX rate. The current interest rate is around 3.1-3.2%, which is among the lowest available.

The association considers the construction cost negotiations the most important task this year. Kim said, "We have selected a construction management (CM) firm and signed a contract with a law firm. Since the construction company has its own experts, we are also responding with the help of our own experts." He emphasized, "Our goal is to create a specialized complex that can become a landmark in this area. The role of our executive team is to create value for our members."