[횡설수설/홍수용]Suspension of Dunchon Jugong Construction

The old nicknames of the Dunchon Jugong Apartments in Gangdong-gu, Seoul were ‘the biggest reconstruction since Dangun’ and ‘the biggest fish in the Seoul real estate market’. Expectations for a mini-new city-level complex with 6,100 union members and a trillion-unit construction cost were melted in this. But these days, the unpleasant nickname of ‘a general department store in a reconstruction dispute’ has been added. This is because of the recent controversy over the removal of asbestos, a first-class carcinogen, in 2019 and the delay in general sale due to the sale price regulation in 2020.

▷Dunchon Jugong, built in 1980, originally served as an opportunity for ordinary people to buy a house at a low price. However, after the designation of the maintenance area in 2006, the image of low-income apartment buildings disappeared as the value of the reconstruction of Seoul yolk was highlighted. At the end of 2019, just before the start of construction, the price of a 99m² apartment dedicated to Dunchon Jugong reached 1.8 billion won. Although the sale price is unlikely to exceed 35 million won per 3.3 m² and loans are difficult, it has become a ‘lottery complex’ where anyone without a home dreams of turning their lives around.

▷ As the expectations and interests of the reconstruction were complicatedly entangled, the conflict between the cooperative and the contractor grew at the same time. The cause of the conflict is a contract to increase the construction cost signed by the union and the contractor in the past in June 2020. The current union claims that the contract is invalid because there is a procedural problem, while the construction team counters that it is a legal contract. After the two sides ran parallel, the construction company stopped the construction on the 15th, and on the 16th, the reconstruction association decided to cancel the construction cost contract that was decided at the previous general assembly.

▷ Now, the reconstruction of Dunchon Jugong is becoming a ‘losing game’ for everyone. The union borrowed close to 2 trillion won from the financial sector to cover relocation and business expenses. The annual interest burden caused by business delay alone amounts to 80 billion won. The contractor, as the contractor, is holding the fire of compensation for delay. Not only are the interest on a moving loan, which is about 300 million won per person, snowballing, union members are not sure how much to extend the cheonsei contract they are living in temporarily.

▷ The suspension of Dunchon Jugong construction is not just a problem for a single reconstruction complex. The supply of 12,000 units from this complex is one-fourth of the planned supply in Seoul this year. If the move-in is delayed, it can have a chain shock on the sales and rental markets. The city of Seoul sent a coordinator to Dunchon Jugong to act as an arbitrator, but oral recommendations close to townships did not have much effect. There is a high expectation that the supply will increase due to the easing of the reconstruction regulations, but it is difficult with the current method of leaving it only to cooperatives and contractors that are full of distrust. The new government’s housing policy of expanding supply through the private sector has been put to the test.

Editorial member Hong Soo-yong [email protected]

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