"‘What if only 30% rented?’... Redevelopment in a hurry stumbles due to COVID-19"

Assembly Ban Due to Social Distancing Level 2 Upgrade Disrupts General Meetings
Unions in Bulgwang 5 District and Heukseok 11 District Anxious Ahead of Project Implementation Approval Applications
Mandatory Redevelopment Rental Ratio to Increase Up to 30% from September 23
Public Redevelopment Briefings Also Temporarily Suspended

[Image source=Yonhap News]

[Asia Economy Reporter Onyu Lim] Redevelopment projects, which are already pressed for time, have been hampered by the novel coronavirus disease (COVID-19). With the social distancing level raised to Level 2, large-scale gatherings have been banned, causing disruptions to major redevelopment schedules in Seoul, such as Bulgwang 5 District and Heukseok 11 District, which were preparing to apply for project implementation plan approval before the mandatory increase in redevelopment rental ratios in September. Additionally, the government's key housing supply measures in the metropolitan area, including public reconstruction and public redevelopment, are also facing setbacks.

According to the real estate industry on the 27th, the Bulgwang 5 District redevelopment association in Eunpyeong-gu, Seoul, which planned to hold its regular general meeting on the 6th of next month, is struggling to find a suitable venue. Initially, the association decided and announced an outdoor event venue in Deogyang-gu, Goyang-si, Gyeonggi Province as the meeting place, but the contract could not be finalized due to COVID-19. A representative of the venue explained, "While the contract was still verbal, the government raised social distancing to Level 2, resulting in the venue being unavailable and notifying us accordingly. Although many association members have inquired, the venue is unavailable not only for the Bulgwang 5 District meeting but also for other events."

After the social distancing was raised to Level 2, the Seoul Metropolitan Government requested cooperation from each district office on the 19th to postpone major redevelopment and reconstruction associations' general meetings. A Seoul city official stated, "We recommended banning gatherings of more than 50 people indoors and more than 100 people outdoors, but if unavoidable, we provided administrative guidance to strictly comply with quarantine guidelines. We also informed that failure to comply with quarantine guidelines could result in legal action."

For now, Bulgwang 5 District plans to hold the general meeting by finding an alternative venue. This is to avoid the mandatory increase in the rental ratio, which is directly linked to project profitability. When the Enforcement Decree of the Urban and Residential Environment Improvement Act is revised on the 23rd of next month, the mandatory rental ratio for redevelopment, currently up to 20%, will increase to a maximum of 30%.

Heukseok 11 District in Dongjak-gu is in a similar situation to Bulgwang 5 District. Heukseok 11 District plans to hold a temporary general meeting on the 29th in preparation for applying for project implementation plan approval. The association encourages members to submit written resolutions due to concerns about the spread of COVID-19, but at least 20% of members must attend in person for the meeting to be valid. Considering that there are 699 members in this district, at least 140 must gather. A representative of the Heukseok 11 District association said, "If the meeting is delayed, the rental ratio will increase, causing harm to the members. We plan to proceed while strictly adhering to quarantine rules."

Not only private redevelopment associations but also public maintenance projects, which are key supply measures in the metropolitan area, are facing difficulties. The Public Maintenance Project Integrated Support Center, opened by the Ministry of Land, Infrastructure and Transport and the Seoul Metropolitan Government on the 20th at the Korea Land and Housing Corporation (LH) Yongsan Special Headquarters, had to suspend operations due to a confirmed COVID-19 case within the building.

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