In Seoul's small-scale dwellings maintenance projects, cases are mounting in which associations are formed but fail to secure a construction contractor or ensure business viability, leading them to abandon the projects. In Seoul, there are 117 sites that received approval to form an association for a street-block housing maintenance project but have not moved to the next stage. Of these, 44 passed three years after approval. As the amount of general pre-sale supply remains small and construction costs rise, profitability is falling, prompting criticism that the advantage of a "fast maintenance project" is fading.
According to the maintenance industry on the 22nd, Yangcheon District in Seoul announced on the 16th that it canceled the approval to form an association for the "Shinwol-dong 461-3 street-block housing maintenance project." The project site covers 2,732.1 square meters around 461-3, Shinwol-dong, Yangcheon District. The plan called for building 110 households in a building with one basement level and 13 above-ground floors.
After receiving approval to form an association in September 2022, the association tried to select a Sigongsa but ran into difficulties. It held two rounds of bidding at the end of 2023, but both failed. In the end, a majority of association members agreed to dissolve, and they asked Yangcheon District to cancel the approval to form the association. Yangcheon District canceled the approval under Article 23-2 of the Special Act on the Maintenance of Empty Houses and Small-Scale Dwellings.
A street-block housing maintenance project is one that maintains the existing road network while carrying out small-scale maintenance of aging, low-rise residential areas surrounded by roads. Unlike large-scale redevelopment and reconstruction, it does not require steps such as designating a maintenance zone and forming a promotion committee, which can shorten the project period. According to the Seoul city government, the 32 completed street-block housing maintenance projects took an average of 4 years and 2 months from association formation approval to completion.
However, the sharp rise in construction costs is highlighting the limits of small-scale projects. Because the project size is small, it is hard to expect cost-saving effects from joint material purchases or large-scale equipment operations. The volume for general pre-sales is also small, making it difficult to cover higher construction costs with pre-sale revenue. When builders shun bids for sites with low business feasibility, the selection of a Sigongsa repeatedly fails, and the association members' contributions inevitably rise.
Associations abandoning projects continue to emerge. In Seocho District, the Pungnim Hyundai street-block housing maintenance project had its association formation approval canceled in April last year, and in Seongdong District, the Jeongan Mansion Phase 7 street-block housing maintenance project had its approval canceled in October the same year. This year, after the Doksan Row Houses in Geumcheon District, the Shinwol-dong 461-3 project in Yangcheon District was also halted.
There are also many sites where projects have been stalled for a long time. An analysis of the status of street-block housing maintenance projects released by the Seoul city government at the end of March this year showed that of 225 projects in progress, 117 were stuck at the association formation approval stage. Of these, 44 had passed three years since approval, or 37.6%.
Experts say easing area and floor area ratio regulations and expanding public support are needed to shore up business feasibility. Song Seung-hyeon, head of Urban and Economy, said, "It is hard for economies of scale to work in small-scale maintenance projects," and added, "We need to actively consider expanding project implementation zones, upgrading zoning districts, easing the burden of public rental dwellings, and supporting purchases of unsold dwellings."