General Election Promises and Rising Housing Prices... Sanggye Jugong Reconstruction Gains Momentum

Ruling and Opposition Candidates Unveil Various Development Pledges
Preliminary Safety Inspection for 'Aljja' 6th Complex Underway
Expectations Rise Over Potential Floor Area Ratio Incentives

[Asia Economy Reporter Choi Dong-hyun] The reconstruction of Jugong Apartments in the Sanggye-dong area of Nowon-gu, a large mid-rise apartment cluster in the northeastern part of Seoul, appears to be resuming. As candidates from both ruling and opposition parties flood the pre-election period with various development pledges that could stimulate real estate prices, the 6th complex, noted for its prime location, is accelerating its reconstruction, thereby influencing surrounding complexes.

According to industry sources on the 10th, the Sanggye-dong Jugong 6th complex recently formed a preliminary reconstruction promotion committee and is currently collecting consent forms for a preliminary safety inspection. Under the Urban Residential Environment Improvement Act, more than 10% of residents must agree for the maintenance project entity to conduct a preliminary safety inspection. This inspection is the first step in the reconstruction process; if passed, a detailed safety inspection follows, and if a grade of D or lower is given, reconstruction becomes possible. A representative of the apartment’s preliminary promotion committee stated, "Although the reconstruction excess profit recovery system and the price ceiling system for pre-sale impose burdens, we cannot continue living in an old apartment," expressing their intention to proceed with the project.

Built in 1988, the year Seoul hosted the Olympics, this apartment complex consists of 2,646 units in mid-rise buildings ranging from 9 to 15 floors. It is composed solely of small apartments sized between 32 and 59 square meters (exclusive area). Located near Nowon Station, a transfer station for subway lines 4 and 7, and surrounded by well-equipped convenience facilities, it is considered the best location in the area.

Currently, among the Jugong apartments in Sanggye-dong, only the 8th complex has successfully advanced its reconstruction project. The 8th complex is currently under construction and will welcome residents in December under the new brand name Forena Nowon. Among the other complexes, none have yet reached the main stage of the project. The 5th complex, the fastest among them, passed the detailed safety inspection in May 2018 and was selected last year as a pilot site for Seoul City’s urban and architectural innovation plan. The 7th complex, located north of Nowon Station, also has a promising location and high expectations for reconstruction, but it has yet to pass even the safety inspection.

The sluggish progress of reconstruction projects in the Sanggye-dong Jugong apartments is mainly due to most buildings being constructed as mid- to high-rise structures of 15 to 25 floors from the outset. Except for some complexes, most have a floor area ratio (FAR) of around 180-190%. Complexes 4, 9, and 12 even exceed 200%. An industry insider said, "Although it varies by location, generally, when the FAR exceeds 180%, the feasibility of reconstruction projects decreases." Additionally, the reconstruction excess profit recovery system and the price ceiling system have acted as obstacles, and except for some complexes, residents’ expectations for the projects have not been high.

However, as the Nodogang area (Nowon, Dobong, Gangbuk districts), known for its concentration of mid- to low-priced apartments under 900 million KRW, gains attention, the atmosphere around reconstruction projects in Sanggye-dong is heating up. Recently, with candidates from both ruling and opposition parties making various development pledges ahead of the general election, this mood has been further stimulated. An industry official said, "For complexes 6 and 7, which are close to subway stations, if they are included in Seoul City’s station area development plan, incentives for floor area ratio may be applied, potentially enhancing project feasibility," adding, "If political promises such as the establishment of a cosmetics industrial complex materialize, the atmosphere in other complexes will also change."

Meanwhile, the market price of the 6th complex is somewhat lower than that of the 7th complex. In January, a 59㎡ unit in the 6th complex was traded at 500 million KRW, while a unit of the same size in the 7th complex was sold for 600 million KRW, 100 million KRW higher in the same month. A representative from real estate agency A in the area explained, "Although the 7th complex is regarded as the flagship of Sanggye Jugong, the location of the 6th complex is not inferior," and added, "As expectations for reconstruction grow, prices are expected to balance out."

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