Small-scale rebuilding projects are gaining pace in Seoul's affluent Gangnam area. Though modest in size, the projects allow developers to skip some procedural steps, prompting apartment complexes to move ahead in earnest. A string of newly built apartments completed through rebuilding in the area, along with a rapid run-up in home prices, has also spurred the projects.
Cheonggu Apartments in Samseong-dong, Gangnam-gu, is close to winning approval to form a rebuilding association, according to redevelopment industry sources on the 15th. Momentum built this year, and a public review of residents' views required for the approval was completed by Aug. 28. Small-scale rebuilding is a system introduced in 2018 to streamline procedures for housing complexes with fewer than 200 units and improve aging residential conditions.
The complex has accelerated its plans after the Seoul Metropolitan Government temporarily eased the floor area ratio for small-scale rebuilding up to the legal ceiling. The city revised its urban planning ordinance last year to allow the ordinance-based floor area ratio for small-scale rebuilding in Class 2 and Class 3 general residential zones to be raised to the legal ceiling for three years. That lifted the cap to 250% in Class 2 zones and 300% in Class 3 zones.
Cheonggu Apartments had struggled to proceed because its existing floor area ratio of 261% exceeded the 250% ordinance limit for Class 3 general residential zones. The easing opened the way to apply a ratio of up to 300%, creating room for the project. "Rebuilding has been discussed for a long time, but talks began in earnest after the city revised its ordinance last year, and now we are on the verge of forming an association," an official at a nearby real estate brokerage said. "The completion last year of expensive rebuilt apartments nearby, such as Samsung Acro and Cheongdam Le Reel, also had an effect."
Cheongdam Hyundai 1st Apartments, near Cheongdam Station, is also moving faster. After winning approval to form an association on May 23 last year, it is running a tender through the 17th of this month to select a professional redevelopment management firm. Shinbanpo 26th, near Jamwon Station, obtained association approval in June. The widening gap in housing preference between new and older buildings as new complexes such as Maple Zai were completed nearby, together with improved project economics from the eased floor area ratio, is seen as driving the projects.
Expectations are showing up in prices. A 79-square-meter unit at Gaepo Lucky Apartments near Maebong Station, where residents completed their move-out in April, traded at 2.28 billion won in February last year, but asking prices have since risen to as much as 3.7 billion won.
The concentration of small-scale rebuilding in Gangnam also stands out. Of 73 project sites in Seoul as of June, 13, or 17.8%, were in Gangnam-gu and Seocho-gu, according to the city's data on small-scale rebuilding.
"Small-scale redevelopment offers few units for general sale and can face difficulties in selecting a builder, but it serves to renew aging housing and supply new homes," said Roh Si-tae, a real estate specialist at KB Kookmin Bank. "It is also meaningful in that it diversifies the ways housing is supplied."
