"Integrated redevelopment," which combines multiple apartment complexes into a single project, is spreading across Seoul's redevelopment market. As surging construction costs and worsening project feasibility make it increasingly difficult to advance small-scale projects, a clear trend has emerged toward securing economies of scale to improve feasibility and gain the premium of a large complex.
According to the redevelopment industry on Wednesday, integrated redevelopment projects are gaining pace across Seoul, including Hanshin Seorae, Shinbanpo Palace and Hyundai Donggung in Banpo-dong, Seocho-gu; Daechi Woosung 1st and Ssangyong 2nd in Gangnam-gu; and Singil Woosung 2nd and Woochang Apartments in Yeongdeungpo-gu.
A leading success story of integrated redevelopment is Raemian One Bailey in Banpo-dong, Seocho-gu, which combined complexes including Shinbanpo 3rd and Kyungnam Apartments into a large complex of 2,990 units. Maple Zai in Jamwon-dong was also created on a scale of 3,307 units by integrating several complexes. As the success of large-complex redevelopment around Banpo spreads, integrated redevelopment is being assessed as a new formula for Seoul's redevelopment market.
Hanshin Seorae, Shinbanpo Palace and Hyundai Donggung in Banpo-dong have drawn industry attention after Han Hyung-ki, the former "star union chairman" who led the Raemian One Bailey integrated redevelopment, took over as chairman of the preparatory promotion committee last year. The three complexes formally launched the project by signing an integrated redevelopment agreement in January. According to the preparatory promotion committee, it plans to file an application for advisory-style rapid integrated planning for the redevelopment plan revision reflecting the integration of the three complexes on June 16. The consent rate at each complex is reported to have exceeded 75%.
The preparatory promotion committee is targeting a redevelopment zone revision announcement around June next year and approval of the integrated union establishment around September. It is then advancing the project toward relocation in January 2029 and occupancy in July 2034. To minimize conflict during the integration process, the project is proceeding on the premise of an independent settlement system and in-place redevelopment.
"We expect to be able to secure a scale of more than 1,100 units through integrated redevelopment," Chairman Han said. "There are advantages such as securing community facilities within the complex, the effect of reducing construction costs, and being able to draw greater participation from construction firms." He added, "The integration process is effectively more than 90% complete," and predicted, "Occupancy within eight years is also possible."
Woosung 1st and Ssangyong 2nd in Daechi-dong, Gangnam-gu, are also accelerating integrated redevelopment. On May 21, the Seoul Metropolitan Government announced the redevelopment plan decision and redevelopment zone designation (revision) for the Daechi Woosung 1st and Ssangyong 2nd redevelopment project, as well as the district unit planning zone and district unit plan decision (revision). The two complexes are set to be redeveloped from the current 840 units into a complex of up to 49 stories and 1,324 units. An official from the Daechi Woosung 1st redevelopment project union said, "We plan to hold an integration general meeting in August," adding, "We also plan to proceed with the contractor selection process after the second half of the year." Samsung C&T (028260.KS), Hyundai Engineering & Construction (000720.KS) and DL E&C (375500.KS) are reportedly showing interest.
Integrated redevelopment is also active outside the Gangnam area. Yeomchang Woosung 1st and 2nd and Samchully Apartments in Gangseo-gu applied for the rapid integrated planning advisory project in July last year, and are reported to have completed the third rapid integrated planning advisory meeting last month. According to the redevelopment plan decision and redevelopment zone designation proposal and the district unit plan decision proposal, which were on public display through February, the three complexes will be redeveloped into a total of 996 units. This represents an increase of 394 units from the current combined 602 units.
Singil Woosung 2nd and Woochang Apartments in Singil-dong, Yeongdeungpo-gu, reached the final stage after receiving management disposition approval on May 27. Korea Asset Trust serves as the project implementer, and record-high transactions are continuing amid the integrated redevelopment drive. The head of a nearby real estate brokerage A said, "There is always waiting demand because of a shortage of listings," explaining, "Woochang is a small complex of 214 units, but expectations that it will be transformed into a large complex after redevelopment are being reflected."
The larger the complex, the higher the rate of price gains, which is encouraging integrated redevelopment. According to Real Estate R114, as of May, the rate of change in sale prices of Seoul apartment complexes by size showed that complexes with fewer than 300 units rose 10.34%, while complexes of 1,000 to 1,499 units rose 17.77% and complexes of 1,500 units or more rose 16.95%.
Experts stress that while integrated redevelopment is advantageous in terms of securing feasibility, conflict management is more important than anything else. Yang Ji-young, a senior expert at Shinhan Premier Pathfinder, said, "With construction cost increases, large-complex redevelopment that can secure economies of scale has a relatively advantageous aspect compared to small-scale complexes," but stressed, "Since cost burdens increase the more a project is delayed, the biggest variable is whether agreements can be smoothly reached among complexes to proceed quickly."
