As construction costs rise in Seoul and tighter regulations take hold, some aging complexes are turning their attention to remodeling as redevelopment and reconstruction projects run into difficulties.
According to the maintenance industry on Oct. 18, on Oct. 14 the 13th Seoul City Architecture Committee approved the remodeling plan review for Daechi Hyundai Apartment in Gangnam District, Seoul. On the same day, Goduk Anam Apartment in Gangdong District, Seoul also passed the remodeling plan review. Both complexes are expected to add more than 70 households through vertical extensions compared with the existing complexes.
Remodeling had initially been shunned for its weaker profitability compared with redevelopment and reconstruction. But as construction costs have recently climbed, profitability has also worsened for redevelopment and reconstruction projects, while remodeling can avoid regulations such as limits on relocation loan amounts for reconstruction and redevelopment (up to 600 million won) and the reconstruction excess profits recovery system. Remodeling is not subject to the reconstruction excess profits recovery system and carries no obligation for contributed acceptance. Because it does not demolish existing buildings, the shortened timeline is another advantage, making the overall project period shorter than redevelopment and reconstruction.
In particular, as the likelihood grows that the National Assembly will pass bills to improve the remodeling system, there are projections that remodeling projects will gain further momentum. A bill to amend the Dwellings Act introduced in February by Rep. Moon Jin-seok of the Democratic Party of Korea includes provisions such as: adding a clause for construction cost verification; allowing unit splits within 5% of the existing number of households; permitting integrated reviews by the Architecture Committee; allowing integrated remodeling project promotion; establishing a new rule for union dissolution after project completion; and expanding the establishment of remodeling support centers.
Rep. Kang Dae-sik of the People Power Party also introduced an amendment to the Dwellings Act in April to promote remodeling. It includes establishing the scope of remodeling change permits, conducting safety inspections for extension-type remodeling within 30 days, and integrating into a single review the safety assessment for vertical extension-type remodeling.
The bills are currently pending in the Land Infrastructure and Transport Committee's subcommittee for bill review. A committee review report assessed the bills favorably, leading to an optimistic outlook for passage in the National Assembly.
Earlier, in September, the Ministry of Land, Infrastructure and Transport's Sept. 7 measures included activation plans such as allowing "1+1 sales" for large-unit remodeling over 85 square meters of exclusive area, and measures to simplify permitting procedures by allowing electronic unanimous resolutions and construction cost verification, similar to reconstruction. Regulations were also eased to allow remodeling projects to proceed without registration as a dwelling construction business operator, as with reconstruction.
A remodeling industry official said, "Recently, residents of aging complexes are moving quickly to decide whether to pursue reconstruction or remodeling to improve their living environment. Interest in remodeling projects continues to grow," adding, "If the bills currently introduced in the National Assembly pass, not only the business viability of remodeling projects but also the pace of progress will improve significantly."
Construction companies have also moved to expand remodeling projects. Samsung C&T's Next Remodeling and Hyundai E&C's major repair business are representative. POSCO E&C also showcased the nation's first vertical extension remodeling at Jamsil The Sharp Reuben.
Experts say it remains realistic for complexes with limits on reconstruction to choose remodeling as an alternative. Lee Tae-hee, a research fellow at the Korea Research Institute for Construction Policy, said, "For multifamily dwellings built since 1990, the floor area ratio was raised to 400%, so there are almost no units available for general sale in reconstruction, and in some complexes the floor area ratio would actually decrease with reconstruction." Lee added, "With construction costs surging recently, the expense burden is high except in a few areas with strong revenue," and said, "Remodeling will be a realistic alternative to improve the residential environment of aging complexes in these circumstances."