They Say Public Redevelopment... "Will Fair Compensation Be Given?"

Development Site of Dongja-dong Gosiwon Village Visited
Landowners and Commercial Tenants Both Indifferent
High Rental Proportion Raises Concerns Over Housing Prices

[Asia Economy Reporter Ryu Tae-min] “The existing rental income from commercial properties is greater than the future capital gains from housing pre-sale rights. So why would housing and commercial property owners agree to public redevelopment?” (Representative of A Real Estate Agency (licensed) in Dongja-dong, Yongsan-gu, Seoul)

On the afternoon of the 8th, unlike the high-rise officetels lined up along the main road in front of Exit 11 of Seoul Station, behind them were clusters of dilapidated buildings 2 to 3 stories high. In the Huam Special Planning Zone 1 District 1 Lot (Dongja-dong), known as the largest jjokbangchon (tiny room village) in the country, most residents live in jjokbangs, where one house is divided into multiple small rooms. According to a 2019 Seoul city survey, there are 1158 residents living in about 70 buildings in Dongja-dong. On average, each building has 19 rooms, with an average of 16.5 people living in one house. Huam 1 District was designated as a redevelopment target zone in 2006 but has been virtually stalled for 15 years.

On the 5th, the Ministry of Land, Infrastructure and Transport, Seoul City, and Yongsan-gu announced plans to promote a public redevelopment project, drawing renewed attention to Huam 1 District. The plan includes supplying 1,250 public rental housing units and 200 public sale units for jjokbang residents on 47,000㎡ in Dongja-dong, along with up to 960 private sale housing units in buildings up to 40 stories high. The model is similar to the '2·4 Supply Plan,' where landowners transfer ownership and the public sector leads development directly. However, land and commercial property owners with resident consent rights are voicing opposition, raising concerns that the pilot public redevelopment under the 2·4 Supply Plan may face difficulties from the start.

When asked about public redevelopment, housing and commercial property owners in Dongja-dong showed cold reactions. Although the lifting of existing height restrictions set to protect the Namsan view is seen positively, there are concerns about insufficient compensation for land. Mr. A, who owns a commercial building, said, “The land in this area has high future value, so if compensation is made at current market prices, it would be disadvantageous to landowners.” In fact, the Huam Special Planning Zone 1 District (Dongja-dong) Preparatory Promotion Committee opposed the plan to compensate designated land on the 9th based on official land prices in cash, prompting the Ministry of Land, Infrastructure and Transport to soothe concerns by stating that compensation would be appraised considering current transaction prices.

There is also skepticism about the government's promise to prioritize housing supply rights for housing and commercial property owners. Mr. A expressed concern, saying, “If rental apartments for jjokbang residents are built, I worry that property prices in the area will plummet.”

Commercial tenants also share concerns about public redevelopment. Mr. B, who runs a cafe nearby, lamented, “If redevelopment proceeds, I will have to move my store. I worked hard to establish my place, so what am I supposed to do if I am suddenly told to leave now?”

On the other hand, most tenants living in the jjokbangchon welcome the news of relocation to rental apartments. Mr. Kim (68), a tenant of a row house who has lived here for over 10 years, said, “I have high expectations since they are providing moving expenses and rental housing,” and added, “If the public sector takes charge, disputes among residents can be resolved quickly.”

Seo Jin-hyung, President of the Korea Real Estate Society (Professor at Gyeongin Women's University), said, “The success or failure of the public redevelopment in Huam 1 District, the pilot area of the 2·4 Supply Plan, will greatly influence overall future policies,” adding, “If the project fails due to lack of resident consent, other reconstruction and redevelopment candidates will also turn away.”

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