Construction Delays Plague Seoul Redevelopment Projects, Increasing Costs for Residents

Redevelopment projects in Seoul are facing significant delays, with some waiting years to begin construction even after residents have relocated and demolition has been completed. Ongoing negotiations over construction costs and changes to project plans are contributing to these delays, leading to concerns about increased financial burdens for residents.

According to the redevelopment industry on September 27, a notable long-delayed project in the Bangbae 14 district of Seocho-gu received management approval in December 2017. After relocating residents, the project reported the completion of building demolition in January 2024. However, due to subsequent changes in the project plan, construction has yet to commence, now over two years after demolition.

In July, the Bangbae 14 project began determining the pricing for general sales and selecting companies for infrastructure development. This month, it received approval for changes to the project implementation plan, with further verification of the management plan currently underway.

Nearby, the Bangbae 13 district is also experiencing prolonged delays due to various complications. After receiving management approval in 2018, the project faced legal challenges regarding the establishment of the association, compensation for religious facilities, and soil contamination issues. Although relocation began in 2021, ongoing negotiations over construction costs have further delayed the start of construction.

A representative from a local real estate agency noted, "The hilly terrain with rocky ground and slopes requires higher civil engineering costs compared to flat sites. The prolonged negotiations between the association and the construction company appear to be causing the delays in starting construction."

In the Noryangjin 4 district of Dongjak-gu, the project initially aimed to begin construction in the second half of this year after completing relocation and demolition. However, significant design changes have led to a revision of the project implementation plan and management plan, introducing additional uncertainties regarding the timeline.

In the Garak Plaza project in Songpa-gu, residents of the original 672 units completed their relocation after receiving management approval in 2025. The project passed a comprehensive review in March of this year, with the goal of starting main construction in the second half of 2027. Even if the project proceeds as planned, a considerable gap in the timeline is unavoidable.

A source in the redevelopment industry stated, "Just because relocation and demolition are completed does not mean construction can start immediately. If there are significant design changes or prolonged negotiations over construction costs, various procedural steps must be repeated, and financial costs continue to accumulate in the meantime."

While the reasons for construction delays vary by project, the resulting costs ultimately accumulate in the association's budget. Even during periods when main construction has not started, financial costs related to project funding, operational expenses, and various service fees continue to accrue. Residents who have relocated must also bear the burden of interest on relocation loans and temporary housing costs until they can move into their new apartments.

The longer the gap before construction begins, the more likely the initial profit and cost structure established for the project will change. Particularly, if construction costs rise or if design and sales conditions change while waiting for construction to start, the project budget may need to be adjusted.

For residents, this means facing dual burdens due to project delays. As the actual start and completion of construction are postponed, the duration of temporary housing increases, along with the potential for additional financial contributions due to rising project costs.

Moreover, if negotiations over the increased project costs between the association and the construction company drag on, the construction schedule may face further delays. The need for renegotiation of construction costs or design changes adds additional decision-making and procedural steps, creating a cycle where delays in construction lead to changing project conditions, which in turn cause further delays.

Professor Seo Jin-hyung from Kwangwoon University’s Department of Real Estate Law stated, "If construction costs rise at the time of starting construction and disputes arise between the association and the construction company, the project timeline will extend, and the financial burden will increase. While redevelopment projects are primarily driven by the association, once administrative procedures begin, it is essential for administrative agencies to process them swiftly to minimize unnecessary delays."