Seoul's prominent reconstruction areas, Yeouido and Mokdong, are facing a housing crisis as large-scale relocations approach. With multiple redevelopment projects accelerating, the demand for temporary housing is rising, while rental listings are dwindling. Concerns are growing that a tax reform aimed at enhancing benefits for primary residents could lead to more landlords reclaiming rental properties for personal use, further tightening the rental market.
According to the construction industry on August 9, the Daegyo Apartment in Yeouido, which received approval for its management plan on May 19, is set to begin relocations around October. Originally built in 1975, the Daegyo Apartment will be reconstructed from 576 units to a maximum of 912 units across 49 floors. The association aims to demolish the existing structure and start construction next year, targeting completion by 2031.
Similarly, the Hanyang Apartment is preparing for relocation in the second half of this year as it completes the final steps of its management plan. This project will transform the existing 588 units into a mixed-use complex with 992 residential units and 60 officetels, with the approval process registered on August 5 in the Seoul city redevelopment project database.
If the relocation timelines for Daegyo and Hanyang overlap, up to 1,164 households in Yeouido will need to find new accommodations simultaneously. Residents prefer temporary housing within Yeouido or nearby areas such as Mapo, Gongdeok, and Mokdong to maintain their community ties. Families with school-aged children face even fewer options, as they are reluctant to leave their established school districts.
An analysis of ongoing or upcoming relocations based on Seoul's redevelopment plans estimates that around 20 projects, involving over 15,000 units, will require new housing this year. The demand for relocation is concentrated in nearby areas to maintain existing community ties and school districts, making it more complex than simply matching the number of relocating households with available housing. If multiple projects coincide, it could place additional pressure on rental supply and prices in specific regions.
The tax reform focused on primary residency is also seen as a potential variable in the rental market. While the current shortage of rental units cannot be solely attributed to the tax changes, an increase in tax burdens on non-residential properties may lead landlords to sell or occupy their properties, reducing the existing rental supply.
A representative from a real estate agency near Yeouido's Shibum Apartment noted, "Landlords with larger units or significant capital gains are contemplating selling before the deduction limits decrease. Additionally, more landlords who have held properties for a long time but have short-term tenants are expressing intentions to move in themselves once leases expire."
As the number of people seeking temporary housing increases due to reconstruction, a decrease in rental units could also impact the relocation schedules of subsequent projects. The Yeouido Shibum and Gongjak Apartments are also progressing through their procedures, making it crucial to stagger the relocation timelines as project speeds increase.
A representative from a real estate agency near Yeouido stated, "With Daegyo and Hanyang moving forward with their relocation and demolition processes, subsequent projects are likely to accelerate as well. Given the current shortage of rental units, it will be challenging for multiple complexes to relocate simultaneously, necessitating staggered schedules."
In Mokdong's Yangcheon District, where the redevelopment project is larger, the rental supply will also be a key factor in future reconstruction efforts. The Mokdong New Town project aims to rebuild the existing 26,629 units into approximately 47,000 units. As all 14 complexes have completed their designation as redevelopment zones and are entering subsequent procedures, there are concerns that relocation demand may concentrate at specific times.
The relocation issue has become a significant condition for projects on-site. DL E&C, which won the bid for Mokdong District 6, has proposed 100% loan-to-value support for relocation costs and a four-year deferral for member contributions. Given Mokdong's characteristics, where families with school-aged children have a strong preference to remain in the area, once relocations begin, demand in the Mokdong and Sinjeong-dong rental markets is expected to surge.
A representative from a real estate agency in Sinwol-dong remarked, "There are many outside residents or single-homeowners from other regions who have already purchased homes nearby. If landlords choose to move in after their leases expire to reduce tax burdens, the rental supply in the area could become even tighter when reconstruction relocations commence."
A member of a Mokdong reconstruction preparation committee stated, "The impact of the tax reform will first manifest in landlords' decisions to hold or occupy their properties. If the rental supply tightens further, it could pose challenges for large-scale relocations in upcoming redevelopment projects."
* This article has been translated by AI.
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