"Four Key Strategies for Cutting Reconstruction Costs"... Nowon-gu's Wolgye Dongshin Apartments End Disputes and Begin Relocation

Interview with Kim Sanyeon, Wolgye Dongshin Reconstruction Association Chairman
Reassessing the redevelopment plan, financing costs, and general meeting expenses
The formula for success: "Secure more, spend less, and finish quickly"

In 2024, banners celebrating approval of the management and disposition plan and announcing a general meeting to remove the association chairman hung side by side at the Wolgye Dongshin Apartment complex in Wolgye-dong, Nowon-gu, Seoul. A reconstruction project that had seemed to be progressing well had been stalled for more than a year amid disputes over construction costs, the dismissal of the association’s leadership, and lawsuits.

Wolgye Dongshin Apartment in Nowon-gu, the first complex to apply the 2.0 business feasibility adjustment coefficient, began relocation on the 29th of last month. Provided by the association.

Kim Sanyeon, 43, who was elected chairman of the Wolgye Dongshin Apartment reconstruction association in March 2025, brought the turmoil under control. His family was concerned when he left a major company where he had been working and took up the association’s work. “It was important to get the project moving forward properly,” Kim said. “Now, we’re focused on completing the relocation on schedule and starting construction as quickly as possible.”

Construction costs are not the only factor that determines how much reconstruction association members must contribute. The final amount can vary significantly depending on how many units for general sale are secured through incentives, how much financing cost is reduced by avoiding delays, and how well the association manages its operating expenses and general meeting costs.

Making Use of the 2.0 Business Feasibility Adjustment Coefficient

Kim cited the application of the business feasibility adjustment coefficient as his biggest achievement. The association had initially pursued a plan to donate 66 rental housing units to the public. In 2025, Kim visited Seo Jun-o, then a Seoul Metropolitan Council member and now the head of Nowon District, to reduce the area allocated to rental housing and minimize losses to the project.

“With Council Member Seo’s help, we consulted with the Seoul Metropolitan Government department responsible for reconstruction and confirmed that the 2.0 business feasibility adjustment coefficient could be applied to our complex,” Kim said. “This made it possible to eliminate the burden of providing rental housing and increase revenue from units for general sale.”

While serving on the metropolitan council, Seo focused on improving the floor-area-ratio incentive system by introducing an adjustment coefficient to promote reconstruction in northern Seoul, including Nowon-gu. The association expects the measure to improve project feasibility by KRW 30 billion to KRW 35 billion, or an average of at least KRW 30 million per association member.

The second strategy was to reduce financing costs. At the time, as the association changed chairmen and lawsuits continued, costs related to cash settlements had reached about KRW 28 billion. In lawsuits with some property owners whose interests were to be settled in cash, interest could continue to accrue at the maximum statutory rate.

To prevent this, Kim asked the contractor for additional funding. “The contractor was initially reluctant, but through negotiations we secured an additional KRW 10 billion in interest-free support,” he said. “After that, we switched the association’s operating funds to loans guaranteed by the Korea Housing & Urban Guarantee Corporation (HUG).” He added, “Borrowing money at a lower cost also improves project feasibility. Reducing interest incurred while a project is delayed is key to managing members’ contributions.”

Cooperative Chairman Kim Sanyeon. Courtesy of the cooperative.

A General Meeting Can Cost Hundreds of Millions of Won... “We First Cut Publicity Staff and Attendance Allowances”

The association also cut operating expenses. At reconstruction association general meetings, significant costs can go toward labor for outreach staff (OS) and allowances for written votes and in-person attendance. “We minimized the number of outreach staff and chose to explain the meeting agenda ourselves through videos and other means,” Kim said. “After seeking members’ understanding, we eliminated allowances for submitting written votes and attending in person, cutting the cost of a general meeting from about KRW 100 million to KRW 30 million.”

The biggest challenges now are completing the relocation quickly and renegotiating construction costs. Kim plans to complete the relocation by the end of December 2026 and minimize “escalation” costs by shortening the gap between approval of the management and disposition plan and the start of construction. With general-sale prices at nearby complexes rising sharply amid the mixed-use development around Kwangwoon University Station, where the GTX-C line will pass, he is also considering ways to improve the project’s appeal.

The principles for a successful reconstruction project, Kim emphasized, are “to study incentives carefully and secure more of them, spend less, and complete relocation and construction quickly.”

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