Hyundai Engineering & Construction asked the Machun District 4 redevelopment association to increase construction costs by nearly 300 billion won. The requested increase is 289.9 billion won, up 75.6% from the original construction cost.
According to the maintenance industry on Apr. 2, Hyundai Engineering & Construction sent an official letter on Mar. 31 to the Machun District 4 redevelopment association for dwellings, asking for an increase in the contracted construction cost. Citing changes to the project implementation plan, Hyundai Engineering & Construction asked to raise the cost from 5.84 million won per 3.3 square meters (pyeong) to 9.59 million won. That is an increase of about 3.75 million won per pyeong. As a result, the total construction cost also surged from 383.4 billion won to 673.3 billion won, an increase of 289.9 billion won (75.6%).
The Machun District 4 redevelopment project will develop the Machun-dong area of Songpa-gu, Seoul, with buildings up to 33 stories and 1,254 households. It is the fastest-moving site among the Machun redevelopment promotion districts. Hyundai Engineering & Construction plans to apply its high-end brand "THE H Cloud."
With persistent inflation compounded by Middle East–driven geopolitical risks, the burden of construction costs at domestic sites is growing. Rising oil prices and exchange rates, higher transportation costs, and unstable naphtha supplies have pushed up prices of key materials, increasing pressure on construction costs.
In fact, more maintenance business sites are being asked to approve construction cost hikes. Hyundai Engineering & Construction requested increases not only at Machun District 4 but also from the Eunpyeong-gu, Seoul, Daejo District 1 association for dwellings redevelopment (Hillstate Mediale) and the Deungchon District 1 association for dwellings reconstruction, among others.
Hyundai Engineering & Construction cited increases in construction input costs during the COVID-19 spread since 2021, as well as schedule extensions and design changes, as reasons for demanding a construction cost increase of more than 70%.
A Hyundai Engineering & Construction official said, "This is a situation occurring commonly at most maintenance project sites nationwide," adding, "At major sites in central Seoul or large complexes, construction costs are currently in the 9 million won range per 3.3 square meters, and we requested an amount in line with that."