The additional share charges that members of reconstruction and redevelopment associations must pay to receive new apartments are rising steeply. The fallout stems from higher construction costs, premium upgrades, and permitting delays.
According to the construction industry on the 13th, the Apgujeong District 4 association in Gangnam-gu, Seoul, recently sent members estimated sales prices and projected share charges showing that, for the same unit type, those receiving an 84-square-meter exclusive unit must pay an additional 650 million to 749.77 million won, and those receiving a 185-square-meter exclusive unit must pay an additional 1.8 billion won. The figures are based on construction costs of 12.8 million won per 3.3 square meters (1 pyeong).
Share charges refer to the expense that members must split after subtracting general sales revenue from the total construction cost of reconstruction and redevelopment. Just over five years ago, projects often reduced members' burdens by securing higher general sales prices, keeping reconstruction share charges per household to 300 million to 400 million won at most. In areas like Gangnam, Seoul, where land is expensive and sales prices are high, members often received money back.
However, with high exchange rates and high interest rates driving up construction costs, share charges are rising quickly. Construction costs for maintenance projects such as redevelopment and reconstruction are exceeding 10 million won per pyeong. In Apgujeong District 2, which is about to select a contractor, construction costs are 11.5 million won per pyeong. The burden of share charges is also growing. If an owner of an existing 152-square-meter exclusive apartment applies for a 128-square-meter exclusive unit, the estimated share charge was 320 million won in 2024, but it jumped to 1.057 billion won last year.
In Gaepo Jugong Complex 6, the last reconstruction complex in the Gaepo-dong area of Gangnam-gu, Seoul, a member holding a 53-square-meter exclusive unit who chooses an 84-square-meter unit will incur about 720 million won in additional share charges. If choosing a 100-square-meter exclusive unit, the share charge is said to exceed 1.1 billion won.
The situation is the same not only for reconstruction complexes but also for redevelopment project sites. In District 8 of the Noryangjin New Town in Dongjak-gu, Seoul, the project went through difficulties due to increased construction costs. The construction cost agreed to by the association and the contractor was 4.98 million won per pyeong, but the contractor raised the per-pyeong amount to 8.16 million won, leading to more than six months of tug-of-war before a hard-fought agreement was reached. As a result, the additional share charges to be borne range from 700 million won to as much as around 1 billion won.
A construction company official said, "In top-tier areas such as Apgujeong in Seoul, many members expect home prices to rise more than the share charges even if they pay more, so it is not a factor that significantly disrupts projects," adding, "In places with low profitability, such as same-site reconstructions, a 'share charge reversal' can occur where share charges exceed existing home prices."
Still, the potential for disputes and conflict among members is a concern. It is also a problem that members who cannot fully shoulder the share charges have no exit. With the Oct. 15 real estate measures designating all of Seoul as a regulated area, transferring member status has become difficult. A single-household, single-home owner can transfer only after meeting the requirements of one year of ownership and five years of residence.
The Seoul Metropolitan Government is asking the central government to ease restrictions on transferring member status, but no agreement has been reached. A Seoul city official said, "We believe easing restrictions on transferring member status and on loans is most necessary, but we have not found common ground with the Ministry of Land, Infrastructure and Transport (MOLIT)."