There is controversy surrounding the redevelopment project of the Jayang 5 district in Gwangjin-gu, near the Guui Station on Line 2 of the Seoul Subway, as Gwangjin-gu is changing some criteria for project progress. Seoul City had designated this area as a redevelopment promotion zone in 2018 to restore urban functionality and aimed to develop office and residential facilities together, but Gwangjin-gu has established a plan to allow the construction of only joint housing (apartments) by splitting the project site after Daewoo Construction and Hoban Construction failed to meet the consent rate requirements of land owners. Gwangjin-gu plans to request the changed redevelopment promotion plan to Seoul City. Seoul City will decide on the revised plan after review by the Urban Redevelopment Committee.
According to the maintenance industry on the 30th, Gwangjin-gu announced the revised redevelopment promotion plan for the Jayang 5 district redevelopment project on the 9th and held a residents' public hearing on the 27th. The Jayang 5 district redevelopment project is set to develop a 5,515 square meter site in Jayang-dong, Gwangjin-gu, with 840 housing units (538 for general sale and 302 for public rental) under the "land owners' method." This method applies to small-scale maintenance projects where there are fewer than 20 land owners, allowing the executing company to apply for a project approval once they meet two conditions: securing the consent of more than 75% of land owners and holding more than 50% of the land area.
To undertake this project, Daewoo Construction established the Jayang Five Project Financing Investment Company (PFV) in partnership with Seorak Plus, Samsung Securities, Shin Young Securities, and Korea Investment & Securities, while Hoban Construction also established a Jayang 5 area PFV with Harim Holdings and Bukook Securities. However, both PFVs failed to meet the consent rate, and the project site was expected to lose its designation as a redevelopment promotion area from Seoul City in January next year.
Both PFVs are experiencing deteriorating financial conditions due to project financing (PF) loan interest expenses and other costs. Hoban Construction's Jayang 5 area PFV recorded a net loss of 35.9 billion won last year and fell into capital impairment. The PFV borrowed 214.1 billion won from its majority shareholder, Hoban Construction, four times from April to this month. Hoban Construction also secured 420 billion won through a PF agreement with major lenders, including Hana Bank, using PFV shares as collateral in June. Daewoo Construction's Jayang Five PFV, which is also majority-owned by them, recorded a net loss of 2.6 billion won last year. They received a general loan of 6 billion won from Seorak Plus and also received a PF bridge loan of 185 billion won from Jayang Ripa First.
Gwangjin-gu divided the Jayang 5 district into the Jayang 5-1 redevelopment promotion zone (27,950 square meters) in the vicinity of 680-67 Jayang-dong and the Jayang 13 maintenance management zone (27,201 square meters) in the vicinity of 680-81 Jayang-dong. Additionally, it proposed that Daewoo Construction build residential facilities with 999 units (690 for general sale and 309 for public rental) in the Jayang 5-1 redevelopment promotion zone with a maximum height of 49 floors above ground and 5 underground levels, while Hoban Construction construct residential facilities with 762 units (648 for general sale and 114 for rental housing) in the Jayang 13 maintenance management zone with a maximum height of 47 floors above ground and 3 underground levels. The division of the district aimed to facilitate land exchange based on the consent forms received by Daewoo Construction and Hoban Construction to proceed with the project. The floor area ratio was increased from the existing 399% to 498% for the Jayang 5-1 zone and 499% for the Jayang 13 maintenance management zone.
The revised plan excludes commercial facilities and small parks and increases the number of apartments. The original plan included residential facilities consisting of four buildings of 24 to 28 floors, one building of office facilities of 30 floors, one cultural facility of seven floors, and mixed-use facilities with a small park. However, under the revised plan, it has changed to propose residential facilities with 999 units (690 for general sale and 309 for public rental) in the Jayang 5-1 redevelopment promotion zone and residential facilities with 762 units (648 for general sale and 114 for rental housing) in the Jayang 13 maintenance management zone.
In relation to this project, Gwangjin-gu held a public hearing at the Jayang 2-dong community center on the 27th. Some attendees expressed their opposition, claiming that selling only apartments in the designated redevelopment promotion zone to restore urban functionality contradicts the intent of the designation and offers preferential treatment to construction companies.
Oh Sin-hwan, chairperson of the ruling People Power Party's Special Committee on Metropolitan Vision, noted, "It was not the intention of the Seoul City to designate a redevelopment promotion zone to build 49-story apartments." He added, "This project, initially intended to restore the city's functionality, merely provides preferential treatment to Daewoo and Hoban."
Resident Kim stated, "The revised plan contradicts the original intent of the Seoul City, which approved it as an area combining work, residence, and community welfare, and it directly opposes the development of the region in terms of improving residents' living conditions, welfare, and attracting corporations."
In this regard, a Gwangjin-gu official stated, "There is no intention to grant specific benefits to any particular business, but Gwangjin-gu believes that developing the Jayang 5 district is necessary to revitalize the area near Guui Station." This indicates that it is necessary to develop even by dividing the project site rather than allowing both Daewoo Construction and Hoban Construction to be unable to proceed with the project due to not meeting the consent rate requirements.