"Still Just Public"... Reconstruction Complexes Shaking Heads Despite 'Exemption from Additional Capital Gains Tax'

Long Road Ahead for '24 Real Estate Measures'
Gangnam Reconstruction Developers "Quality Concerns... Impact on Housing Prices"

"No Merit and Potential Rights Infringement"
Skeptical Even in Public Redevelopment Zones

[Asia Economy Reporters Kim Hyemin, Im Onyu, Ryu Taemin] "I have no interest. I hope the government reflects on the reputation that ‘publicly’ led apartments have had for over a decade."

Although the government has offered unprecedented benefits for ‘public direct implementation’ reconstruction projects, the response from reconstruction sites in the Gangnam area, which houses large-scale complexes, has been lukewarm. Most residents of Gangnam reconstruction complexes visited on the afternoon of the 4th gave positive evaluations of the ‘reconstruction excess profit recovery (재초환) exemption’ but waved off the possibility of participation.

◆ "After all, it’s public... how can we trust the quality?" = Among Gangnam reconstruction complexes, there is a common distrust regarding the quality of projects solely led by public entities.

A representative of the reconstruction promotion committee of Eonma Apartment in Daechi-dong, Gangnam-gu, a representative mid-rise reconstruction site in Gangnam, said, "As soon as the measures were announced, residents contacted us first to oppose them," adding, "Who would agree when all authority is handed over to the public and no one knows what kind of apartment will be built?" Residents also expressed distrust, saying, "If the public directly implements 100% excluding the union, it fundamentally blocks the opinions of union members," and "Poor residential environments are expected, which will inevitably lead to a decline in asset value."

The reactions from other reconstruction complexes were no different. Kim Sungjin, head of the reconstruction union of Sinbanpo 19th Apartment in Jamwon-dong, Seocho-gu, said, "The number of households may increase, but residents might end up with cramped and inconvenient living environments," adding, "Most residents are worried that low-quality public apartments might be built."

The Jugoong 5 Complex union in Jamsil-dong, Songpa-gu, also questioned, "In other countries, the price difference between public and private apartments can be more than double; wouldn’t this ultimately affect housing prices?" An anonymous reconstruction union official in Gangnam added, "We need to first look back at how apartments labeled as public have fared," and "The perception that public apartments are not premium is the fundamental reason for hesitation to participate."

◆ "Can the public resolve resident conflicts?" = Reconstruction complexes are also skeptical about whether public institutions can effectively resolve the sharp conflicts of interest from land acquisition onward.

Park Insik, chairman of the redevelopment promotion committee for Shingil 13 District in Yeongdeungpo, said, "There are intense conflicts among various stakeholders during the maintenance project process," adding, "Shops, apartments, sectional owners, and vacant landowners all have different claims, so it is doubtful whether the public has the drive to resolve these." He expressed concern, saying, "Stakeholders are motivated to resolve issues because their interests are at stake, but public institutions might be different," and "Especially if it escalates to legal disputes, it might be even harder for public institutions to intervene."

A reconstruction union head in Gangnam also said, "Because it involves property rights, stakeholders are very sensitive to each issue," adding, "Even if a voluntary union is formed, coordinating opinions takes time; who would readily agree just because the public is leading?" He further noted, "Even if approval procedures are skipped, legal disputes could lead to a more arduous process."

▲Panoramic view of Eunma Apartment located in Daechi-dong, Gangnam-gu, Seoul on the 4th. (Photo by Ryu Taemin)

◆ "Rights could be infringed"... Public redevelopment candidate sites say No = Existing public redevelopment zones, which are jointly implemented by unions and public entities, also show skeptical responses to the public-only implementation method.

Residents of zones that previously applied for public redevelopment contests judge that public direct implementation has greater uncertainties compared to public redevelopment and offers little merit. Park Jongdeok, chairman of the public redevelopment promotion committee for Shingil 1 District, said, "Public redevelopment also has an expected project period of five years, just like public direct implementation, so shortening procedures is not very meaningful," adding, "Moreover, public direct implementation involves the public purchasing land, which could infringe on existing homeowners’ rights, so public redevelopment is preferable."

Concerns are also emerging that the government’s aggressive supply push with limited resources might shake the existing public redevelopment efforts. An anonymous official from a redevelopment cancellation zone in Gangbuk said, "The reason for choosing public redevelopment was the expectation of rapid progress due to the government’s focused attention," adding, "But now that the government plans to supply 90,000 households through public direct implementation, there is concern that public redevelopment might be sidelined due to limited manpower."

Yang Ji-young, director of R&C Research Institute, said, "The policy was made by accurately identifying market problems, but concerns about residential environments need to be improved to attract private participation." Professor Baek Seongjun of Hansung University’s Department of Real Estate also said, "The policy effect will be greater if public housing quality is properly ensured to dispel concerns about low quality and change perceptions."

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