Preference for Reconstruction Over Remodeling Persists Despite Expanded Authority for Special Cities

View of Ilsan New Town. [Photo=Goyang City]

In South Korea's special cities, including Suwon, Goyang, and Yongin, a new law allowing local governments to directly handle apartment remodeling plans has passed the National Assembly. However, there is a growing preference for reconstruction over remodeling in the field, raising concerns about the limited effectiveness of this policy.
On May 7, the National Assembly approved the Special Act on Support for Special Cities, which expands the authority of cities with populations over one million. The law adds the establishment and modification of basic plans for apartment remodeling to the responsibilities of special city mayors, eliminating the need for approval from provincial governors.
The basic plan for apartment remodeling allows for an increase of up to 15% in the number of units and aims to manage the concentrated demand for relocation that may arise from remodeling projects. It serves as a comprehensive framework for implementing project phases, incorporating resident feedback, and distributing demand.
Currently, mayors of cities with populations over 500,000, excluding Seoul, metropolitan cities, and special self-governing cities, must obtain approval from provincial governors when establishing or modifying basic plans for apartment remodeling, as stipulated in Article 72, Section 4 of the Housing Act. For instance, Suwon City must submit its basic plan, approved by the Urban Planning Committee, to Gyeonggi Province for final approval after consultations with relevant departments.
With the removal of this approval process, there are expectations that local governments will be able to implement support measures more quickly and in line with regional conditions. In fact, local governments have been proposing directions to promote remodeling.
Suwon City has indicated that there is a lack of substantial support measures even after the enactment of the ordinance and has suggested establishing a remodeling support center. Similarly, Yongin City has proposed guidelines for applying government policies related to longevity and modular construction methods in its basic plan.
However, the atmosphere on the ground shows a significant gap between expectations and reality. In first-generation new towns such as Bundang, Ilsan, Pyeongchon, Sanbon, and Jungdong, many projects aimed at remodeling are facing delays and internal conflicts, leading to a shift toward reconstruction. This trend is weakening the market dynamics in key areas of Gyeonggi Province, which were once considered the backbone of the remodeling market.
Ilsan New Town exemplifies this shift. The Muncheon Village 16th district, which gained initial approval for its remodeling project, has become embroiled in internal disputes, with calls for the dissolution of the association and a halt to the project. On the same day, the Gangseon Village 14th district, which also received approval for its association establishment, decided to dissolve its remodeling association during a general meeting last year, effectively abandoning the project.
As uncertainties regarding profitability and speed increase during the project process, residents are increasingly leaning toward reconstruction. Recent easing of reconstruction regulations and expanded floor area incentives have improved the viability of these projects, while remodeling is limited to a maximum increase of 15% in the number of units, restricting the number of units available for sale.
While the expansion of authority for special cities is seen as a meaningful step in establishing a regulatory framework, the actual implementation of projects remains a separate issue. A resident from a remodeling project in Goyang City stated, "Even if the procedures are expedited, what matters is how much more we can earn. Nowadays, with the easing of reconstruction regulations, the profitability appears more favorable, and discussions about reevaluating the project direction are ongoing among residents."
Nonetheless, some areas continue to pursue remodeling as an alternative. The eligibility period for remodeling is 15 years after completion, compared to 30 years for reconstruction, and it is relatively free from restrictions such as limitations on the transfer of membership rights.
In Suwon's Yeongtong District, remodeling projects are actively underway, particularly for apartments over 25 years old. Following the Shinseong, Shin-an, Ssangyong, and Jinhung (Private Complex 5) projects, the Maetan Dong South Apartments received project approval at the end of last year with a floor area ratio of 307%. Additionally, in Yongin's Suji District, a total of six complexes, including Suji Ttireche Apartments, have received project approval.

* This article has been translated by AI.

SoHee Baek