The Allure of Apartment Remodeling: A Viable Alternative to Reconstruction

In South Korea’s dynamic housing market, apartment remodeling presents itself as a compelling alternative to full-scale reconstruction. Governed by the city and residential surroundings maintenance law, remodeling focuses on preserving and enhancing the existing structural framework of apartment buildings, specifically the load-bearing elements like pillars and walls.

One of the key advantages of remodeling lies in its less stringent safety assessment criteria compared to reconstruction. This translates to a significantly faster project timeline. While reconstruction necessitates a safety diagnostic grade of D after 30 years of completion, remodeling can commence almost immediately after the building’s initial completion.

Furthermore, the National Land Planning Act offers considerable adaptability in terms of capacity rate, allowing homeowners to expand their living space by up to 40%. This is notably attractive in scenarios where stricter regulations on volume ratio, building rate, and parking facilities post-demolition might otherwise reduce the overall building area.

Unlike reconstruction projects, remodeling is exempt from donation requirements and the return of excess profit, making it a financially appealing option for many homeowners. Moreover, by preserving existing structures, remodeling promotes sustainability by minimizing resource waste, environmental pollution, and associated social costs.

Apartment remodeling is based on the city and residential environment maintenance law, maintaining and expanding major structures such as pillars and walls of existing apartments.

Challenges and Obstacles: Why Remodeling Struggles to Compete

Despite its inherent advantages, the apartment remodeling market in South Korea faces significant challenges that impede its growth. The primary obstacle is the increasing deregulation of reconstruction and redevelopment projects, which diminishes the relative attractiveness of remodeling.

For instance, the “August 8 measures” announced last year permitted an increase of up to 1.3 times the legal upper limit for station maintenance areas. In certain residential zones, this figure can reach as high as 390%, making reconstruction a more lucrative option for developers and homeowners alike.

Another major hurdle is the difficulty in obtaining approval for vertical extensions. As the amendment of the Housing Act in 2014,only one project,’Jamsil The Sharp Ruben‘ in Songpa-gu,Seoul,has successfully completed a vertical extension remodeling project. This lack of precedent creates uncertainty and discourages potential investors.

The Rising Cost of Construction: A Major Deterrent

Escalating construction costs further compound the challenges faced by the remodeling market. According to the National statistical Office, the construction cost index for domestic construction reached 131.04 in February of this year, representing a 0.7% increase from the end of the previous year. This upward trend significantly impacts the financial viability of remodeling projects.

Notably, “front remodeling,” which involves both horizontal and vertical expansions, can be even more expensive than reconstruction. A recent study by the Korea Research Institute of Research revealed that the construction cost per 3.3 square meters (pyeong) for five remodeling sites last year averaged 8.9 million won, exceeding the average reconstruction cost of 8.2 million won by 8%.

These high costs, coupled with the regulatory hurdles and limited success stories, contribute to the sluggish growth of the apartment remodeling market in South Korea. While remodeling offers a sustainable and efficient approach to urban renewal, overcoming these challenges is crucial for unlocking its full potential.

Construction costs are also burdensome. According to the National Statistical Office, the construction cost of domestic construction was 131.04 in February this year,up 0.7% from the end of last year.