Seoul's small-scale reconstruction projects recorded zero completions last year. Because of weak profitability, many projects have been left idle for years after their associations were formed, leading to permit cancellations or failures to secure builders, causing more projects to stall.
According to the "status of small-scale reconstruction projects as of March 2026" announced by the Seoul Metropolitan Government on the 22nd, only seven complexes have been completed as of last month (Cheongun Villa in Cheongun-dong, Jayang Apartment in Jayang-dong, Useok Yeonlip in Yonggang-dong, Daeheung Yeonlip in Garibong-dong, Daedo Apartment in Bongcheon-dong, Shinsung Villa in Bangbae-dong, and Yeoksam Art Villa in Dogok-dong). None were completed last year.
There are currently 74 complexes pushing small-scale reconstruction in Seoul, and only seven of them have broken ground. A considerable number have received approval to establish associations but have seen no progress. On the 16th, the Gwanak District Office announced it had canceled the approval to establish an association for the Bokgwon Apartment in Bongcheon-dong, which had been pursuing small-scale reconstruction. The reason was the failure to apply for architectural review and business implementation plan approval within two years of the association approval date.
Small-scale reconstruction is a renewal project targeting multi-unit dwellings such as old row-house–type complexes with fewer than 200 households and under 10,000㎡. Because it falls under the Housing Act rather than the Urban and Residential Environment Improvement Act, it does not require establishing a renewal plan or obtaining approval for a management and disposal plan, allowing for faster timelines. Floor area ratio relief also applies. Since September last year, Seoul has temporarily raised the floor area ratio in Type 2 general residential zones from 200% to 250% and in Type 3 zones from 250% to 300%. This aims to invigorate small-scale reconstruction projects, with a goal of supplying about 8,000 households (60 project sites) by 2028.
The biggest issue with small-scale reconstruction is low profitability. Compared with large complexes, the quantity of units for general sale is small, making it difficult to secure profitability by reflecting higher construction costs in sale prices. As a result, builders are reluctant to bid on small-scale reconstruction projects. Jeongneung Sky Yeonlip in Seongbuk District held three on-site briefings since July last year to select a builder, but all failed.
A representative at a mid-sized construction company said, "Where small-scale reconstruction runs smoothly, most are in prime locations like Gangnam," and added, "With raw material prices surging, even large-complex renewal business sites are seeking construction cost hikes, so small-scale reconstruction on the outskirts of Seoul is so unprofitable that there is little reason to participate in construction."