The selection of the construction company for the redevelopment of the Munrae-dong 4th district urban environmental maintenance zone is scheduled for the 11th, but there are concerns about rejection due to the conditions requiring the inclusion of a knowledge industry center within the complex, as it is a semi-industrial area.
According to the maintenance industry and others on the 9th, the Munrae-dong 4th district urban environmental maintenance zone redevelopment project association in the Yeongdeungpo district of Seoul will close bids for the selection of a construction company on the 11th.
The project site is located around 23-6, with a total area of 94,087 square meters. The Munrae-dong area began pursuing redevelopment in 2012 according to the urban environmental maintenance zone maintenance plan for semi-industrial areas. The association planned to supply 1,200 apartment units in nine buildings, including a knowledge industry center, with a maximum building height of 39 floors (18 floors for the knowledge industry center) and a floor area ratio of 299.98% for the apartment units and 459.37% for the knowledge industry center.
However, as the knowledge industry center market has recently experienced a sharp downturn, it has become an obstacle in advancing the project. According to Real Estate Planet, the transaction volume of knowledge industry centers nationwide in the fourth quarter of last year was 672, with a transaction value of 256.9 billion won, the lowest level recorded in the last five years. Compared to a year ago (transaction volume 1,011; transaction value 415.3 billion won), this represents decreases of 33.5% and 38.1%, respectively. The prolonged economic downturn has also impacted the decreasing population of startups.
Previously, the Yangpyeong 13 zone in Yangpyeong-dong, Yeongdeungpo-gu, was designated as a semi-industrial area urban environmental maintenance zone in 2009, but the project faced delays of over 10 years due to a lack of business feasibility. It was later selected as a public redevelopment project in 2021, securing business viability with benefits such as eased floor area ratios.
As concerns about the feasibility of redevelopment in semi-industrial areas continued to delay the projects, the Seoul city government revised some regulations on semi-industrial areas as part of its 'Western Seoul restructuring plan' announced in April last year. The existing semi-industrial areas had a floor area ratio limit of 250%, making it difficult to secure the feasibility of reconstruction and redevelopment, but the ratio was relaxed to 400%.
Subsequently, Munrae-dong 4th is pursuing changes to the maintenance plan within the allowed floor area ratio of 560%, minimizing the originally planned mandatory area for the knowledge industry center due to amendments to the Seoul city ordinances. When the maintenance plan is revised, the number of apartments is expected to increase to about 2,300 units.
However, despite such relaxations, the association expressed concerns about the possibility of rejection, noting that it is difficult to sell the knowledge industry center space, leading construction companies to adopt a somewhat passive stance.
A representative from the Munrae-dong 4th redevelopment association said, "Although the easing of regulations has significantly reduced the proportion of the knowledge industry center, it is difficult to explain since the selection of the construction company takes place before the changes to the maintenance plan. Additionally, even if the proportion is reduced, the feasibility of the knowledge industry center is severely diminished, and due to strict occupancy conditions, it may ultimately have to be changed to office space, which is not being accepted by the Seoul city government." He added, "We will monitor the bidding results on the 11th and respond accordingly."
Construction companies are also reacting that the feasibility is impacted. A representative from a large construction company noted, "Even if the feasibility of the knowledge industry center is poor, the construction company does not take a direct hit. However, if the feasibility declines, it becomes difficult for the business owner to proceed smoothly, which clearly affects the construction company as well. Ultimately, if the feasibility of the maintenance project site declines due to the knowledge industry center in the semi-industrial area, the construction company will continue to face challenges, so easing regulations appears to be necessary."
Another construction company representative stated, "The feasibility of Munrae-dong 4th has improved somewhat due to the easing of regulations in semi-industrial areas, and the proportion of the knowledge industry center has notably decreased. Therefore, there will likely be construction companies showing interest. However, since this bidding is taking place before changes to the maintenance plan, it may affect the results."
Meanwhile, five construction companies, including Samsung C&T, Daewoo E&C, Hyundai Engineering, Hyosung Heavy Industries, and SK Eco Plant, participated in the on-site briefing held on Feb. 24.