The association of the A business site in Dongjak District, Seoul, is currently negotiating with the construction company regarding interior materials. They are requesting to exclude imported materials. As construction costs have skyrocketed, the strategy is to lower costs wherever possible. The association seeks a construction cost of about 7 million won in the mid-3.3㎡ range. The chairperson of the A business site said, "The construction costs have risen too high, so we are advocating for 'selection and concentration,'" adding, "Interior materials will be based on individual choices, but we are negotiating to upgrade the exterior and community areas."
Changes are occurring in the renovation industry, which had been shouting for 'upgrading' unconditionally. This is due to an increase in associations focusing on 'construction cost reduction.' They prefer domestic materials over imported ones and are suggesting minimizing specialized designs and free options. These associations also consider that even though they are new constructions, they often undertake extensive interior renovations.
According to the renovation industry on the 22nd, as the average construction cost at business sites in Seoul has exceeded 8 million won per 3.3㎡, some associations are pivoting toward cost-saving measures. Basic materials are all domestic, and there are cases where kitchen shelves, doors, and bathroom materials are classified so that members can choose.
The chairperson of the B business site in Gwangjin District noted, "There have even been jokes within the association about whether we should introduce 'minus options,'" stating, "Members are also sensitive to additional contributions and want to go in a direction that minimizes costs as much as possible."
The reason associations have changed in this way is due to the perception that construction costs have risen excessively. According to a survey by the Housing Environment Research Institute of 65 business sites nationwide where construction costs were disclosed last year, the average construction cost of renovation projects in Seoul was recorded at 8,427,000 won per 3.3㎡ last year. This is nearly a 60% increase compared to 5,287,000 won four years ago in 2020.
A representative from a large construction company C stated, "If members feel burdened by the contributions, they may change the finishing materials or switch basic parts to optional ones, shifting the burden from the association as a whole to each member."
However, not all business sites have undergone such changes. There are still places that want to construct expensively, even if it incurs contributions. Gangnam, Yongsan, and Mapo are representative areas. Last year, the most expensive construction costs were in the Mapo District, where the construction cost per 3.3㎡ was 10.5 million won. The Namyeong 2 District in Yongsan took second place at 10.48 million won.
In Banpo, where active reconstruction projects are underway in the Gangnam area, the construction cost per 3.3㎡ for most apartments is approaching 10 million won. In the case of Samho Garden 5th Apartment in Seocho District's Banpo-dong, a planned reconstruction renovation cost was announced at 9.9 million won per 3.3㎡. Samsung C&T, Daewoo E&C, and POSCO participated in the reconstruction of Samho Garden 5th, and Samsung C&T was selected as the preferred negotiation contractor. Additionally, Shin Banpo 4th Apartment proposed a construction cost of 9.5 million won, and Shin Banpo 2nd also suggested 9.5 million won.
Associations that have begun to reduce construction costs have also considered that new residents are spending large sums on interior renovations. Increased spending includes raising the basic ceiling to a vaulted ceiling, replacing kitchen countertops with imported marble, and changing walls to full marble. This is also why there has been a surge in 'show homes' during the pre-move inspection period. According to the interior industry, before COVID-19, the interior construction cost was around 1 million won per 3.3㎡, but it has recently risen to 3 million won when using high-quality materials. It is said that a major renovation of a 84㎡ apartment incurs an interior expense of 100 million won.
The chairperson of the D business site promotion committee said, "Recently, costs related to relocation, such as agency fees and moving costs, have also risen significantly, leading many to think about changing their long-term residence to their liking when they move in." They added, "Given this, there is no reason to unnecessarily upgrade interior materials."