Construction costs at maintenance project sites such as reconstruction and redevelopment in core areas of Seoul have easily surpassed 10 million won per 3.3 square meters (pyeong). Following Gangnam-area maintenance projects rising into the 12 million won per pyeong range, Yeouido is also seeing projects one after another reporting construction costs in the 10 million won per pyeong range. Some projects ahead of selecting a contractor are even expected to propose construction costs in the 13 million won per pyeong range.
This rise in construction costs for maintenance projects centered on Gangnam and Yeouido, where high-end apartments are being built, appears likely to spread across Seoul. That is because raw material prices and labor costs are expected to climb more steeply due to the Middle East war. With construction cost increases expected to delay maintenance projects and push up sales prices in tandem, there is a growing outlook that securing a home in Seoul will become even harder.
According to the maintenance industry on the 4th, a reconstruction project site in Yeouido, Yeongdeungpo District, Seoul, is reportedly considering setting construction costs in the 13 million won per pyeong range ahead of bidding to select a contractor. A maintenance industry official said, "Considering premium finishes and recent situations such as the Middle East war, I understand there is a possibility that construction costs could rise to the high-13 million won range."
Major maintenance project sites in Seoul have already ushered in the era of 10 million won per pyeong construction costs. In Apgujeong District 3 in Gangnam District, the construction cost is 11.2 million won per pyeong; Apgujeong District 4 set it at 12.5 million won; and Apgujeong District 5 set it at 12.4 million won. In Seongsu District 1 in Seongdong District, it is 11.32 million won per pyeong, and in Yeouido, the Daegyo Apartment is also 11.2 million won per pyeong. Among the Mok-dong New Town complexes in Yangcheon District, Mok-dong Complex 6, which is the first to proceed with contractor selection, is at 9.5 million won per pyeong, nearing 10 million won.
This high per-pyeong construction cost level in key maintenance project sites could spread across Seoul. Construction costs for maintenance projects have been steadily trending up due to rising raw material prices and labor costs. Average construction costs per pyeong for maintenance projects have steadily increased: ▲2021, 4.8 million won ▲2022, 5.18 million won ▲2023, 6.06 million won ▲2024, 7.7 million won ▲2025, 8.08 million won.
In particular, as the war in the Middle East drags on and disrupts the supply of construction materials, construction costs are likely to rise further. In the construction industry, anxiety persists that material supply will become more difficult due to competition to secure volumes in advance amid rising raw material prices and reduced production incentives among intermediate-goods producers. In addition, factors that could push up construction costs are widespread, including the government's stricter construction regulations and the implementation of the yellow envelope law, a new labor law aimed at strengthening the bargaining rights of subcontract workers.
Lee Eun-hyung, a research fellow at the Construction & Economy Research Institute of Korea, said, "Even if the Middle East situation ends, it will be hard to immediately restore past cargo volumes, and with oil prices, exchange rates, and other expenses added, factors driving construction cost increases will persist," adding, "In effect, cost disputes in private-sector construction will likely continue."
Rising construction costs can directly lead to higher presale prices. In maintenance projects, construction costs account for the largest share of total project costs. When construction costs rise, total project costs increase, which in turn exerts upward pressure on general presale prices. In addition, higher construction costs are passed on as increased contributions from association members, which can cause project delays. Prolonged timelines can ultimately lead to greater burdens for association members and higher presale prices.
As construction costs keep rising, average presale prices of private apartments are also going up. According to the Korea Housing & Urban Guarantee Corporation (HUG), in March the average presale price of private apartments in Seoul reached 54.8 million won per pyeong, a record high. A construction industry official said, "Higher construction costs lead to larger contributions from association members and to higher presale prices, increasing the burden on projects," adding, "Whether for association members or general homebuyers, securing a home becomes harder."