Redevelopment industry experts unanimously agree that the Yangji Village case in Bundang is merely a preview of the chaos to come in the integrated redevelopment of South Korea's first-generation new towns. Because complexes with entirely different interests are pursuing projects together, friction is structurally inevitable, and trust companies acting as project operators find it difficult to demonstrate the execution and drive needed to mediate disputes among owners, unlike redevelopment associations. Voices are now calling for supplementary measures, such as introducing a government-level mediation committee to coordinate differences and resolve conflicts, rather than leaving project progress solely to the Korea Land and Housing Corporation (LH) and trust companies.
According to the redevelopment industry on the 7th, under the Special Act on the Redevelopment of Aging Planned Cities, first-generation new towns are structurally compelled to pursue integrated redevelopment to qualify for benefits such as safety inspection exemptions and floor-area ratio incentives. Integrated redevelopment has the advantages of improving project feasibility to reduce members' contributions and securing green spaces and common areas by grouping multiple complexes together.
The problem is that complexes with completely different interests in terms of size, price, and location have been forcibly bundled together to receive incentives. Yangji Village is a case where conflicts among residents that had been simmering beneath the surface came to light. Yangji Village owners are split between a residents' representative group led by the Kumho and Hanyang apartments in Complexes 3 and 5, and a redevelopment promotion preparation committee centered on the Cheonggu apartment in Complex 2. Owners of the Kumho and Hanyang apartments in Complexes 3 and 5, which feature larger units but are not near subway stations, want independent settlement and integrated sales, while other complexes prefer in-place redevelopment, fueling the conflict.
Other complexes pursuing redevelopment within the first-generation new towns will inevitably face disagreements over settlement methods and unit assignments, similar to Yangji Village, depending on ownership stakes and locations. Conflicts do not surface until pilot districts are designated, but complaints erupt as projects gradually progress after designation. Such conflicts could lead to legal disputes over time and potentially halt projects altogether.
Integrated redevelopments that have proceeded successfully in the past allowed for free prior consultation on settlement methods and other issues, but residents in first-generation new town redevelopments have limited options. Kim Je-kyung, head of Toomi Real Estate Consulting, drew an analogy: "The conflicts emerging in the Yangji Village integrated redevelopment process are not much different from college students with entirely different backgrounds being forced into a group project and arguing with one another."
Experts also point out that the trust company structure makes conflict mediation difficult. Most first-generation new town redevelopments are being pursued through the trust method because it reduces construction cost disputes and secures project management expertise. Expectations that the construction period could be shortened by two to three years also factor in. While the association method also sees internal disputes and funding management issues, association members actively work to resolve conflicts to maximize their own interests, whereas the trust method faces numerous constraints. An employee at a real estate trust company said, "Trust companies are fundamentally financial firms that provide financial guarantees. They do not want to bear legal responsibility and therefore have no will to mediate disputes."
Another trust company official said, "If core issues such as settlement problems are not resolved in the early stages of the project, the matter could escalate into legal disputes later. Enforcement rules that can coordinate and resolve competing interests at the outset need to be established, but this is not an easy process from a trust company's perspective." The paradox is that trust-centered redevelopment, chosen to shorten project timelines, ends up slowing them down instead.
Experts predict that the first-generation new town redevelopment process will not go smoothly unless a body capable of mediating conflicts is created. Kim In-man, head of the Kim In-man Real Estate Economics Research Institute, said, "A strong entity with responsibility is needed. The most realistic approach is for the Ministry of Land, Infrastructure and Transport (MOLIT) to take full authority and apply both carrots and sticks." Under this approach, incentives such as floor-area ratios would be offered, but incentives would be withdrawn if parties refuse to accept government-led conflict mediation, thereby driving the project forward.
Some call for MOLIT and local governments to create a consultative body similar to a mediation committee. Yoon Ji-hae, head of the research lab at Real Estate R114, advised, "Mediation by the permitting authority is essential to at least partially resolve conflicts. Local governments need to play a coordinating role." Suh Jin-hyung, professor of real estate law at Kwangwoon University, emphasized, "This situation has arisen because the government placed excessive trust in the functions of trust companies. A body involving MOLIT, local governments, LH, and trust companies should be created to find solutions. In particular, local government intervention in the redevelopment process helps resolve conflicts."
MOLIT's position is that it is exchanging views with trust companies and will step in directly to mediate if dispute resolution is needed. A MOLIT official said, "We will actively utilize the dispute mediation committee under the Urban Redevelopment Act to move projects forward."
