As reconstruction fees in the hundreds of millions of won were signaled at some complexes pushing redevelopment in the first new towns, residents are growing increasingly concerned.
According to the real estate industry on the 2nd, among the first new towns, the issue of member contribution fees is emerging among residents of complexes designated as leading districts for reconstruction under the Special Act on Aging Planned Cities.
Yangji Village in Sunae-dong, designated as a leading reconstruction district in Bundang, Seongnam, Gyeonggi, is one of 13 areas selected in Nov. 2024 by the Ministry of Land, Infrastructure and Transport as first new town leading reconstruction districts, and it was designated and announced as a special maintenance zone in Jan. this year.
Currently, a total of six complexes with 4,392 households (Sunae-dong Kumho 1 and 3, Cheonggu 2, Hanyang 1 and 2, and the Kumho·Cheonggu·Hanyang 6 mixed-use complex) are expected to be transformed through integrated reconstruction into a large complex of 6,839 apartments with a maximum height of 37 stories.
Among them, for the Kumho·Cheonggu·Hanyang 6 mixed-use complex in Yangji Village, although the exact contribution has not yet been set, concerns are spreading that even with reconstruction at the same floor area, the contribution could reach up to 700 million won. The mixed-use buildings 601 to 603 consist of exclusive areas of 55–65 square meters (20-pyeong range), but the land share, evaluated as an indicator of reconstruction profitability, differs by more than two times. By building, the land share is 32.505 square meters (9.85 pyeong) for Building 601 (24 pyeong), 11.814 square meters (3.58 pyeong) for 602 (24 pyeong), and 23.859 square meters (7.23 pyeong) for 603 (26 pyeong).
For this reason, in the local real estate market, if a floor area ratio of 360% and construction costs of 9 million won per 3.3 square meters proposed by the Yangji Village Integrated Reconstruction Promotion Preparatory Committee are applied, there is a view that the estimated contributions could diverge by up to threefold, with Building 601 at around the 100–200 million won range, Building 603 in the 300 million won range, and Building 602 in the 600–700 million won range.
However, real estate experts analyzed that for mixed-use complexes, the actual contributions are unlikely to diverge more than threefold because market prices are sufficiently reflected during appraisal regardless of land equity.
Under Article 16 of the Appraisal Act and the Act on Ownership and Management of Condominium Buildings, appraisal values may be indicated by separating land value and building value according to reasonable standards.
Han Hyeong-gi, head of HK Future Housing Research Institute, said, "The Yangji Village mixed-use complexes are all in the 20-pyeong range, and their market prices are similarly around 1.5 billion won," adding, "When calculating rights values for the complex's reconstruction, even if there are differences in land shares, market prices cannot be ignored, so it will be difficult for the contributions to diverge by as much as threefold."
A resident identified as A in one of the Yangji Village complexes said, "The government designated Yangji Village as a leading district to which the Special Act on Aging Planned Cities applies, allowing the floor area ratio to be raised to as high as 400%, but as talk spreads that the reconstruction contributions will be far higher than expected, many residents feel at a loss," adding, "Even if the floor area ratio is raised, a large portion must be given as public contributions, and with soaring construction costs, residents will ultimately have to make up the difference out of pocket."
In Sanbon, one of the first new towns, there are also voices opposing reconstruction. In Gunpo Sanbon-dong Jugong 11 and other complexes pushing for designation as leading districts in Sanbon, opinions calling for opposition to reconstruction are emerging, centered on older residents. For the 58.01-square-meter exclusive units, current market prices are in the 500 million won range, but to receive 70–82 square meters after reconstruction, the estimated contribution is expected to be in the 100–200 million won range.
A resident identified as B in one of Sanbon's leading-district complexes said, "Telling elderly residents whose only lifetime asset is a single home to pay half the market price in cash is effectively telling them to leave," adding, "I am retired and my income has fallen a lot, and I don't want reconstruction to become a burden on my children."
Real estate experts pointed out that even with floor area ratio incentives offered to the first new towns, there are many limits to smooth project implementation.
Kim Je-kyung, head of Tumi Real Estate Consulting, said, "Raising the floor area ratio through the Special Act on Aging Planned Cities is not free," adding, "Contributed acceptance such as supplying rental housing increases accordingly with the floor area ratio hike." Kim added, "Except for Bundang among the first new towns, there are not many places where profitability can be ensured, so with current policies alone, revitalizing reconstruction in the first new towns falls short."
Lee Dong-ju, managing director at the Korea Housing Association, said, "From what I know, the average member contribution needed for first new town reconstruction is about 400 million won," adding, "In the first new towns, the proportion of retired elderly people is high, so most assets are concentrated in real estate, and there are many negative views on pushing reconstruction by stretching to pay the contributions." Lee said, "When designating leading districts for first new town reconstruction, the government encouraged integrated reconstruction, which bundles complexes together," adding, "As complexes near subway stations and those far from stations undergo reconstruction at the same time, with differences in each complex's land equity and location, disagreements and conflicts among residents are inevitable."