The remodeling market is picking up as the government, under pressure to expand housing supply and stabilize the market, moves to ease rules on the practice. Apartment complexes with floor area ratios already so high that redevelopment or rebuilding is not financially viable are shifting to remodeling one after another in response. The Seoul city government, which has relied mainly on redevelopment and rebuilding to add housing, also plans to promote remodeling, a move expected to draw more construction companies into the market.
Six remodeling associations won approval in the first half of this year, according to the Korea Remodeling Convergence Society on the 25th. The number of such approvals fell to two in 2024 and one last year from 14 in 2023, but has rebounded this year. The complexes approved this year are Hansol Village 6 in Bundang, Gyeonggi Province; Yuwon Seocho in Seoul's Seocho district; Garak Hanshin in Songpa district; Namsan Town in Sindang, Jung district; Shindonga 4 in Dongjak district; and Mokdong Hanshin Chunggu in Yangcheon district.
Remodeling is most active in the greater Seoul area, where housing demand is strongest. As of last month, 150 complexes nationwide, comprising 120,980 units, were pursuing remodeling, according to the society. Seoul accounted for more than half with 82 complexes, followed in Gyeonggi Province by 14 in Yongin, 10 in Anyang, nine in Bundang district of Seongnam, eight in Suwon and six in Gunpo.
The central government and the Seoul city government plan to boost downtown housing supply by promoting remodeling alongside support for redevelopment and rebuilding. In August, the Ministry of Land, Infrastructure and Transport gave public notice of proposed rules to lower the consent rate required for remodeling approvals to 70% from 75%. An amendment to the Housing Act passed by the National Assembly in August as a follow-up to the Sept. 7 supply measures also included support for joint remodeling of adjacent complexes. "Remodeling needs to be encouraged as part of redevelopment projects for supply to remain stable," a ministry official said. "We are reviewing additional steps to speed up remodeling while assessing the effect of the revised decree."
The Seoul city government also plans to release details of its remodeling promotion measures soon. "We are preparing measures so that remodeling can compete on the same terms as rebuilding," Seoul Mayor Oh Se-hoon said at a news conference marking his first 100 days in office on the 7th. "We will disclose specifics before long." The plan is expected to include support such as minimizing procedures while tightening safety management.
With some remodeling rules eased, aging apartment complexes in the greater Seoul area are moving faster. The remodeling preparatory committee for Haengdang Hanjin Town in Seoul's Seongdong district is stepping up efforts to collect consent forms needed to form an association. "Winning consent from older residents is one of the hardest parts, but the response has been good recently because a change in the law now allows units to be split, which can generate monthly rental income," a committee official said. Joongang Heights 1 in Gwangmyeong, Gyeonggi Province, which applied for association approval in April, is expected to win approval as early as this year. "We finished applying after collecting consent for the association, and because the consent threshold for approvals is dropping to 70% from 75%, we expect this to move faster than we had anticipated," said Cho Tae-il, head of the complex's remodeling preparatory committee.
Construction companies are also treating remodeling as a new source of revenue alongside redevelopment and rebuilding, building up technical capacity and rolling out their own business models. POSCO E&C, which has won remodeling contracts worth 14.3 trillion won ($9.9 billion) across 46 complexes, landed a 526.4 billion won ($364 million) remodeling contract for Isu Shindonga 4 in Seoul's Dongjak district on the 24th. Samsung C&T, which has introduced an urban renewal model called Next Remodeling that replaces a building's exterior while keeping the existing frame, won a remodeling contract the same day for Banpo Prugio in Seoul's Seocho district. Hyundai Engineering & Construction is also expanding its housing improvement business through The New House, launched in June last year.
Despite the string of eased rules, obstacles to remodeling remain, including caps on the number of units and the burden of project costs. "Residents still face heavy contributions, and financing costs are high," an official at a remodeling association in Seoul said. "Rebuilding projects can get low-interest loan support, but remodeling projects are not eligible, so we are relying on loans from the contractor."
Some say the verification system needs to work better in response to rising construction costs. The Housing Act amendment approved in August requires verification when construction costs rise beyond a certain level, but the Korea Remodeling Association plans to propose adding a simplified cost verification procedure to the enforcement decree so the system functions in practice. "We will make proposals to the government on the decree under the revised Housing Act," said Cha Jeong-yoon, vice chairman of the association. "We also plan to propose establishing a standard remodeling contract and setting up regional remodeling support centers."
Others say safety inspection standards need to be spelled out. A second safety inspection is currently mandatory for vertical extensions, but no standards have been set for horizontal extensions, leaving implementation to individual local governments. "There are no codified standards for second safety inspections of horizontal extensions, so it is left to the discretion of local governments," said Yoo Young-chan, senior researcher at the Korea Institute of Civil Engineering and Building Technology. "Because the impact on safety varies with the scope of structural change, the requirements for applying a second safety inspection should be specified."