Dunchon Jugong Sale Price Increase Steps... "Key is Contribution Under 100 Million Won"

Predicted Pre-sale Price Target Over 35.5 Million KRW per 3.3㎡ Three Years Ago
Year-end Pre-sale Price Review Planned... Considering Real Estate Downturn and Other Factors

View of Dunchon Jugong Reconstruction Site, Gangdong-gu, Seoul / Photo by Mun Ho-nam munonam@

[Asia Economy Reporters Kyungjo Noh, Seoyul Hwang] The general sale price increase for the Dunchon Jugong reconstruction in Gangdong-gu, Seoul (Olympic Park Foreon) has become inevitable. As the additional burden per union member approaches 200 million KRW, causing public dissatisfaction, the union intends to raise the sale price as much as possible to ease the situation. Some analyses suggest that the sale price must exceed 40 million KRW per 3.3㎡ to compensate for union members' losses.

According to the maintenance industry on the 21st, the union plans to apply for a sale price review by the end of this year, aiming for sales early next year. Initially, based on an internal evaluation at the beginning of the year, the expected sale price was set at 32.2 million KRW per 3.3㎡, but due to cost increases from construction suspension, the sale price is likely to rise. The union believes this is unavoidable to reduce additional contributions from members.

The Dunchon Jugong construction consortium (Hyundai Engineering & Construction, HDC Hyundai Development Company, Daewoo Engineering & Construction, Lotte Engineering & Construction) recently requested the union to approve a revised construction contract amounting to 4.36775681 trillion KRW (excluding VAT). This is about 1.1 trillion KRW more than the original construction cost of 3.2 trillion KRW. The initial construction cost for the Dunchon Jugong reconstruction project was around 2.6 trillion KRW but was increased to about 3.2 trillion KRW in June 2020.

This increase caused the current construction suspension issue. The Dunchon Jugong reconstruction work was halted at midnight on April 15 following conflicts between the union and the construction consortium. However, as the project could no longer be delayed, both parties agreed on April 11 to resume construction.

Considering there are about 6,100 union members, the additional construction cost burden per person is approximately 180 million KRW. The construction consortium stated, "Although the Korea Real Estate Board's verification results are pending, the increase is unavoidable, only differing in degree. Setting the sale price above 40 million KRW per 3.3㎡ would reduce the additional burden on union members, but given the real estate downturn, it is a matter to watch."

The union plans to hold a general meeting on the 15th of next month to approve the consortium's request. Following the Korea Real Estate Board's verification results, individual contributions and the expected completion date will be finalized.

The union is reportedly considering a sale price of up to 39 million KRW per 3.3㎡. The basic construction cost, one of the sale price review items under the price ceiling system, has risen due to increased raw material prices, and the price is not considered high compared to surrounding market prices. However, due to the real estate market contraction, the possibility of unsold units must be considered.

Previously, in October 2019, the union set a target general sale price of 35.5 million KRW per 3.3㎡ at the delegates' meeting. However, the Housing and Urban Guarantee Corporation (HUG) proposed 29.9 million KRW per 3.3㎡ during their review. The union strongly opposed this and, after deliberation, accepted the price ceiling system and postponed the sale schedule. Since then, the project has experienced ups and downs, continuing to this day.

A representative from the Dunchon Jugong Union Normalization Committee (Jeongsangwi) said, "Now that the project costs are fixed, the project profits must be determined. To successfully complete the project, it is crucial to raise the sale price as much as possible to keep the burden below 100 million KRW per member."

Meanwhile, the Dunchon Jugong reconstruction is called the "largest reconstruction project since the founding of Korea," involving the demolition of 5,930 households and the construction of 12,032 households in 85 buildings up to 35 floors above ground.

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