Dunchon Jugong Is Just a Preview... Construction Sites Nationwide Come to a Halt

Conflict Over Sale Prices Amid Soaring Raw Material Costs

The Dunchon Jugong Reconstruction Complex in Gangdong-gu, Seoul, the largest-ever reconstruction project, is facing a construction halt crisis. As conflicts over project costs between the association and the construction companies reach a peak, the Dunchon Jugong Construction Consortium (including Hyundai Engineering & Construction and three other companies) has announced a construction stoppage starting from the 15th. The photo shows the reconstruction site on the 14th. Photo by Hyunmin Kim kimhyun81@

Due to factors such as soaring raw material prices, signs of construction halts are being observed at multiple construction sites nationwide. This is causing disruptions to the housing and financial plans of prospective residents waiting to move in and could affect the overall housing supply schedule, making urgent countermeasures necessary.

According to the maintenance industry on the 19th, the sales schedule for Imun 1 District in Dongdaemun-gu, Seoul, is being delayed. District 1 postponed the general sales originally scheduled for the first half of this year due to design changes and issues with pricing. In Daejo 1 District, Eunpyeong-gu, demolition was completed long ago, but construction has not even started due to conflicts over construction costs with the contractor. The situation is no different in provincial areas. The redevelopment project of Udong 3 District in Haeundae-gu, Busan, known as the largest redevelopment in the Busan area and highly anticipated by the market, is seeing construction companies withdrawing. At the contractor selection bidding held on the 12th, no construction company submitted a bid proposal. A maintenance industry official said, "It seems companies judged that it would be difficult to make a profit under the current raw material price situation if they were to meet the union’s demands for upgrading the complex."

Recently, the prices of construction raw materials such as rebar, cement, and aggregates have surged, increasing the cost burden on construction companies, compounded by urban redevelopment unions demanding higher-end complexes. The price of rebar, which was about 750,000 KRW per ton in January last year, has risen to 1,040,000 KRW, an increase of about 40%, and during the same period, ready-mixed concrete prices have also increased by about 25%. The price of bituminous coal, an essential item in the cement manufacturing process, has risen, leading to increased prices for cement-related products. Prices of major finishing materials such as aluminum and nickel have also increased. The Ukraine crisis has further fueled the surge in raw material prices. Rising international oil prices have driven up overall transportation and raw material costs.

One of the core reasons behind the recent construction halt at the Dunchon Jugong reconstruction project in Gangdong-gu, Seoul, is also the surge in raw material prices. The conflict between the contractor and the union over construction costs involves differing opinions on material upgrades and reflecting raw material price increases. A construction industry official said, "Raw material prices have risen to an extent incomparable to 2-3 years ago, while demands for upgraded materials, finishes, facilities, and appearance are intensifying," adding, "Delays in groundbreaking or sales are not limited to Dunchon but are already occurring nationwide."

Delays in sales and groundbreaking are likely to lead to increased financial burdens on prospective residents and public harm such as housing market stimulation due to supply shortages. There are calls for active government intervention. Park Cheol-han, a research fellow at the Construction Industry Research Institute, said, "It is necessary to diversify raw material import sources and consider measures such as tariff reductions." Corporate self-help measures, including prudent management plans considering the global economic situation, are also required. Research fellow Park advised, "Companies should plan conservatively and respond flexibly regarding project cost issues."

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