As reconstruction fees running into hundreds of millions of won were signaled at some complexes pushing ahead with first-phase new town rebuilds, residents are growing anxious.
According to the real estate industry on the 2nd, among the first-phase new towns, a dispute over union members' fees is emerging among residents of complexes designated as pilot districts for reconstruction subject to the Special Act on Aging Planned Cities.
Yangji Village in Sunae-dong, designated as a pilot district for reconstruction in Bundang, Seongnam, Gyeonggi, is one of the 13 pilot districts for first-phase new town reconstruction selected by the Ministry of Land, Infrastructure and Transport in Nov. 2024, and in Jan. this year it was designated and announced as a special maintenance zone.
A total of six complexes with 4,392 households (Kumho 1 and 3 in Sunae-dong, 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 floors.
Among these, at the Kumho·Cheonggu·Hanyang 6 mixed-use complex of Yangji Village, although the exact fee has not yet been set, concern is spreading that even with the same floor area after reconstruction, the fee 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 their land share—used as a key business feasibility indicator—differs by more than double. By building, the land shares are: Building 601 (24 pyeong) 32.505 square meters (9.85 pyeong), Building 602 (24 pyeong) 11.814 square meters (3.58 pyeong), and Building 603 (26 pyeong) 23.859 square meters (7.23 pyeong).
Because of this, in the local real estate market, there is speculation that if a floor area ratio of 360% and construction costs of 9 million won per 3.3 square meters as proposed by the Yangji Village Integrated Reconstruction Promotion Preparatory Committee are applied, the estimated fees could diverge by up to threefold: about 100 million–200 million won for Building 601, around 300 million won for Building 603, and 600 million–700 million won for Building 602.
A resident A of one complex in Yangji Village said, "Although the government designated Yangji Village as a pilot district applying the Special Act on Aging Planned Cities, allowing the floor area ratio to be raised up to 400%, many residents feel at a loss as word spreads that the reconstruction fee will be far higher than expected," and added, "Even if the floor area ratio is raised, a large portion must be given as public contributions, and construction costs are surging, so won't residents ultimately have to make up the difference with cash?"
Opposition to reconstruction is also emerging in Sanbon, one of the first-phase new towns. At complexes such as Jugong 11 in Sanbon-dong, Gunpo, which is pushing to become a pilot district, opinions led by older residents are calling for opposition to reconstruction. For units with an exclusive area of 58.01 square meters, the current market price is in the 500 million won range, but to receive 70–82 square meters after reconstruction, the estimated fee is expected to be in the 100 million–200 million won range.
Resident B of a pilot-district complex in Sanbon said, "Telling older residents whose single home built over a lifetime is their entire fortune to pay half the market price in cash is telling them to move out," and added, "I am retired and my income has dropped a lot, and I don't want to become a burden to my children because of reconstruction."
Real estate experts said that even if floor area ratio incentives are offered in first-phase new towns, there are many limits to smooth project implementation.
Kim Je-gyeong, head of Tumi Real Estate Consulting, said, "Raising the floor area ratio through the Special Act on Aging Planned Cities is not free," and noted, "contributed acceptance tied to raising the floor area ratio, such as supplying rental housing, increases accordingly." Kim added, "Except for Bundang among the first-phase new towns, there are not many places where business feasibility can be secured, so under the current policies alone it is far from enough to invigorate first-phase new town reconstruction."
Lee Dong-ju, managing director of the Korea Housing Association (KHA), said, "From what I understand, the average estimated union member fee needed for first-phase new town reconstruction is about 400 million won," and explained, "In first-phase new towns, the share of retired older residents is large, so most of their assets are concentrated in real estate, and there are many negative views about overextending to pay fees and push reconstruction." Lee said, "When designating pilot districts for first-phase new town reconstruction, the government encouraged integrated reconstruction that bundles complexes together," and added, "As complexes near subway stations and those far from stations are rebuilt at once, and as land equity and location differ by complex, disagreements and conflicts among residents are inevitable."