The redevelopment of Mok-dong New Town, cited as the "last big catch" in Seoul's reconstruction market, is getting on track. As redevelopment in Mok-dong — the largest among the so-called "Ap-yeo-mok-seong," meaning Apgujeong, Yeouido, Mok-dong and Seongsu-dong — picks up speed, observers say a full-scale bidding war has begun for contracts totaling 30 trillion won. Major builders have also already begun behind-the-scenes competition.
According to the redevelopment industry on the 26th, Mok-dong Complex 4 secured the legal basis to push ahead with reconstruction after receiving approval to establish a residents' association from the Yangcheon District Office on the 21st. After the area was designated for redevelopment in Aug. last year and the promotion committee was approved in Nov., approval to establish the association was completed in six months. Considering it usually takes two to three years from area designation to association approval, the pace is notably fast.
Among the 14 complexes in Mok-dong New Town, the number that have received approval to establish an association has increased to four. Starting with Complex 6 in May last year, Complex 12 and Complex 8 followed, and now Complex 4 has joined. The fastest-moving site is Complex 6. A general meeting to select a construction contractor is scheduled for next month, and DL E&C has been chosen as the preferred negotiator. Next, Complex 4 plans to issue a bid notice for a construction contractor in July, and Complex 8 in Aug., with both aiming to finalize contractor selection within the year.
Of the remaining 10 complexes, eight are pursuing reconstruction under a trust structure. In a trust-structured reconstruction, the association pays a portion of development gains as fees and entrusts implementation and management across the project to a professional trustee, allowing faster progress. For the eight complexes, designation and public notice of the trustee as project implementer have all been completed, and Complexes 5, 9, 10, 11, 13 and 14 are aiming to select a construction contractor in the second half of this year.
This means 10 complexes will select construction contractors this year alone, and as the big stage is set, builders are busy. In particular, major builders are focusing on Mok-dong Complex 7.
Mok-dong Complex 7 sits at an ultra-prime location right by Mok-dong Station on Subway Line 5. It is also close to highly sought-after school districts in Mok-dong, such as Mokun Elementary and Mokun Middle, giving it strong end-user demand. Its existing floor area ratio is relatively low at around 125%, making it a complex with strong business viability.
A representative at a major builder said, "Complex 7 has average land shares in the 20-pyeong range, so its business viability is strong," adding, "Even amid the recent surge in construction costs, it is one of the few complexes where members can expect refunds."
According to the redevelopment plan, if an owner of an 89.05-square-meter exclusive unit moves to a similar 84.99-square-meter exclusive unit, the expected refund is 275.62 million won. Given that higher construction costs have recently increased additional contributions at major redevelopment sites in Seoul, observers say this is unusual.
Mok-dong Complex 7 plans to hold a founding general meeting to establish the association on June 7 and then apply for approval to establish it. Major builders such as Samsung C&T, Hyundai Engineering & Construction, GS Engineering & Construction, DL E&C, POSCO E&C and Lotte Engineering & Construction are said to be showing interest.
Other complexes also have a high likelihood of competitive bidding. The industry expects high-end design competition, financing terms, stability of construction costs and brand value to emerge as key variables in the bidding war. A redevelopment industry official said, "Mok-dong is the representative redevelopment area in southwestern Seoul, combining location, schools and project scale," adding, "Competition among builders to secure construction rights will become increasingly fierce."