[Exclusive] "Please Raise Redevelopment and Reconstruction Costs"... 1.6 Trillion Won Cut After Inflated Requests

Ahn Taejun's Office Cites Data from Korea Real Estate Board

1.6 Trillion Won Cut Across Top 10 Projects After Verification

20 Percent of Cost Increases Found Unnecessary

According to an investigation by the Korea Real Estate Board into redevelopment and reconstruction sites where construction costs were increased at the request of contractors, 21.7% of the increased amount turned out to be unnecessary from the outset. Among the top 10 projects with the largest cost reductions, the total amount reduced reached 1.6 trillion won. At some apartment sites, the amount of construction cost reduction required exceeded 300 billion won.

A view of an apartment reconstruction site in Seocho-gu, Seoul, on the 23rd. This is a reference photo not directly related to the article. Photo by Yonhap News Agency

According to data submitted by the office of National Assembly Land, Infrastructure and Transport Committee member Ahn Taejun of the Democratic Party of Korea on September 15, the average construction cost reduction rate verified by the Korea Real Estate Board over the past five years (2022–2026) was 21.7%. The Korea Real Estate Board operates a system in which, if a developer intends to increase construction costs by more than a certain percentage for a maintenance project, the operator must request a verification agency to review the appropriateness of the increased costs.

When examining the top 20 projects by reduction size, it was found that approximately 2.3991 trillion won could be reduced. The site with the largest reduction was an apartment reconstruction project in Seoul, where the contractor initially requested a revised construction cost of 3.4879 trillion won, but after verification by the Korea Real Estate Board, this was adjusted to 3.1738 trillion won—a reduction of 314.059 billion won.

There were also redevelopment projects where the requested amount by the contractor was increased by about 322% compared to the initially proposed sum. In one Seoul redevelopment zone, the contractor asked for an increase to 975.5 billion won, far exceeding the initial contract amount of 231.1 billion won. After the Korea Real Estate Board's verification, the construction cost was adjusted to 911.3 billion won, resulting in a final reduction of approximately 64.2 billion won.

The main reasons the Korea Real Estate Board cited for increases in verified construction costs were changes in design and rising prices. Assemblyman Ahn Taejun emphasized, "Since increases in construction costs for redevelopment and reconstruction projects can lead to greater burdens for association members and future residents, the process must be transparent and objective." He added, "Institutional improvements and thorough management are necessary to ensure that unnecessary burdens do not arise during the process of increasing construction costs."

This content was produced with the assistance of AI translation services.