Tick Tock of Sunset System... Redevelopment Projects Accelerate

Approval for Shinbanpo 4th Union Establishment Ahead of March 2 Grace Period Expiry
Jamsil Rose and Hanyang 2nd Also Accelerate Progress

A view of a redevelopment complex in Seoul.

[Asia Economy Reporter Choi Dong-hyun] With the deadline for the application of the maintenance project sunset clause in Seoul just two months away, maintenance project promotion complexes are accelerating the establishment of associations. Although the momentum for project promotion has weakened due to the constitutionality of the private land price ceiling system and the reconstruction excess profit recovery system, there is also a judgment that the burden of cancellation of maintenance district designation is not insignificant.

According to Seoul City and the maintenance industry on the 3rd, since Seoul City sent official letters to each autonomous district last March notifying 38 sites subject to the maintenance project sunset clause to be applied on March 2 this year, 10 project sites have escaped the sunset clause by the end of last year. The sunset clause is a system that allows the mayor or governor to revoke the maintenance district if the next step is not reached within a certain period during the maintenance project process. The sunset clause has been applied to maintenance projects since February 1, 2012, but places where the promotion committee was formed before the law's enforcement date could avoid the sunset clause due to lack of legal grounds. However, with the amendment of the supplementary provisions of the 'Urban and Residential Environment Maintenance Act (Dojungbeop)' in March 2016, these sites also became subject to the sunset clause. Instead, a four-year grace period was granted, which ends on March 2 this year.

The Shinbanpo 4th Reconstruction Promotion Committee in Jamwon-dong, Seocho-gu, which was the first to promote reconstruction, recently received approval for association establishment from Seocho-gu Office, thus avoiding the sunset clause. Shinbanpo 4th is a mid-rise apartment complex that moved in in 1979 and is now in its 42nd year. The association plans to reconstruct the existing 1,212 households into apartments with up to 35 floors, 12 buildings, and 1,696 households. At one point, the project faced a crisis of suspension due to disagreements with nearby NewCore shopping mall owners, but recently succeeded in establishing the association with the consent of the majority of owners. An association official explained, "Ahead of the sunset clause, opinions were gathered to establish the association together with the apartment and shopping mall."

The Jangmi Apartment in Sincheon-dong, Songpa-gu, the last riverside reconstruction complex in the Jamsil area, is also speeding up the establishment of an association to escape the sunset clause. This complex, with about 2,100 households, had been sluggish in project promotion due to conflicts with shopping mall owners, but by the end of last year, the consent rate for association establishment approval exceeded 75%. The promotion committee plans to hold an inaugural general meeting on February 23 and submit an application for association establishment approval to Songpa-gu Office. A promotion committee official said, "If the maintenance district designation is canceled and the project is to be promoted again, greater opportunity costs will occur than the price ceiling or excess profit recovery system, such as persuading residents and obtaining consent forms again. For now, opinions of apartment and shopping mall residents have gathered to not let go of the reconstruction effort." Nearby Hanyang 2nd is also a complex subject to the sunset clause on March 2, and plans to hold an inaugural general meeting around the end of February.

So far, the maintenance projects that have escaped the sunset clause on March 2 include five reconstruction sites: Yeouido Plaza Apartment, Singil 10 District, Bongcheon 1-1 District, Gaebong 3 District, and Shinbanpo 4th. There are also five redevelopment sites: Sillim 1 District, Cheongnyangni 6 District, Donam 6 District, Gireum 5 District, and Jangwi 3 District. Except for one market maintenance project, the remaining 27 sites are also in the process of holding inaugural general meetings or applying for extension approval. However, in the case of extension applications, there have been cases like Jeungsan 4 District where Seoul City rejected the application, resulting in cancellation of the district, so it is uncertain whether the project can continue. A maintenance industry official said, "If the maintenance district is canceled due to the sunset clause, landowners may individually develop, which could greatly reduce the project momentum."

This content was produced with the assistance of AI translation services.