Hyundai Engineering & Construction halts redevelopment work on January 1 due to arrears of KRW 180 billion in construction costs due to the absence of union executives
“The conflict surrounding the union continued to fester and eventually exploded. What can I do now that construction has stopped? “These days, I can’t sleep well at night, and the pain is so bad that I’m dying.” (Member of Daejo District 1 Redevelopment Association, Eunpyeong-gu, Seoul)
Construction work at the Daejo District 1 redevelopment site in Eunpyeong-gu, which is considered the ‘biggest fish’ in the redevelopment of Gangbuk, Seoul, was completely halted on January 2nd. Hyundai Engineering & Construction, the contractor, hinted at the possibility of suspending construction in December last year because it did not receive 180 billion won in construction costs from the redevelopment association. Hyundai Engineering & Construction began halting construction and exercising lien rights on January 1, and the site actually came to a standstill on the 2nd, the first working day of the new year.
Union members say, “I’m dying of headaches.”
On January 3, a banner reading ‘Construction Suspension’ is attached to the entrance to the redevelopment site in Daejo District 1, Eunpyeong-gu, Seoul. [김우정 기자]
On January 3, the reporter visited the Daejo District 1 construction site, and on each of the five entrances, the words ‘Construction suspended (January 1, 24~)’ were written in large red letters on a yellow background. There was also a warning sign in the name of Hyundai Engineering & Construction, the ‘lien holder,’ stating, “The lien is being exercised and unauthorized entry without prior permission is prohibited.” The folding iron door was closed tightly, and the lower part was also covered with wooden plywood so that the inside was not visible. Through the narrow gap, only a stopped tower crane and a 3- to 4-story apartment complex could be seen. “The crane stopped on the afternoon of December 27th last year, and all construction stopped after workers cleaned up the site on the 28th and 29th,” said nearby residents. Through the open side door of one entrance, five or six people involved in the field could be seen coming and going diligently. When I identified myself as a reporter and asked what I was doing at the site where construction was halted, an employee wearing a jumper with the Hyundai Engineering & Construction logo waved his hand and closed the side door.
On the first floor of a commercial building near the construction site in Daejo District 1, there were several Hamba Houses and real estate brokerage offices whose main customers were workers. In particular, most of the businesses with Hamba House signs did not open until after 11 a.m., and many had signs that said, “Closed today.” These are restaurants where construction site workers normally eat breakfast around 5:30 a.m. and lunch around 11 a.m. A restaurant close to the entrance to the construction site was under construction with all its furniture removed. Mr. Joo, a restaurant owner in his 60s whom we met here, said, “We started remodeling because construction stopped and we couldn’t do business properly.” When asked how he felt, he said, “I’m frustrated, but what can I do?” and added, “The conflict within the union was so severe, and I think the failure to hold the general meeting last November was like being slapped in the face by Hyundai Engineering & Construction when I wanted to cry.”
Transformed into ‘Hillstate Mediale’ with 2,415 units
A ‘lien exercise’ warning sign attached to the fence at the redevelopment site in Daejo District 1, Eunpyeong-gu. [김우정 기자]
The basis of the Daejo District 1 redevelopment project is to build 2,415 apartment buildings, 25 stories high above ground, in an area of approximately 360,000 m2 in Daejo-dong, Eunpyeong-gu under the name ‘Hillstate Mediale.’ Construction was scheduled to begin in October 2022 and be completed in January 2026. As of the end of November last year, the completion rate was about 22%. This area redevelopment project received great attention in the real estate market. This is because the transportation infrastructure is excellent as Bulgwang Station and Yeonsinnae Station on Seoul Subway Lines 3 and 6 and Gusan Station and Yeokchon Station on Line 6 are close, and Yeonsinnae Station on Seoul Metropolitan Rapid Transit (GTX)-A Line is scheduled to open. Another advantage is that the entire complex is flat, and that it is called ‘Cho-Pum-A’, which houses Daeuncho. Once the redevelopment of Daejo District 1 was completed, expectations were high that the new large complex would become a new large apartment complex in Eunpyeong-gu, where it is rare.
The problem is that there has been constant conflict inside and outside the Daejo District 1 Redevelopment Association. The project, which seemed to be going smoothly when construction began, suffered difficulties as the union president’s duties were suspended due to a lawsuit in February of last year, and even the proxy system was cited by the court for a temporary injunction to suspend effect. In this process, the general sale scheduled for the first half of last year also failed. The construction company explains that it has been carrying out ‘construction on credit’ in a situation where the union’s executive branch has not been able to function properly. An urban redevelopment project expert said, “Recently, in reconstruction and redevelopment sites, there are many cases where conflicts arise between unions and construction companies over increased construction costs due to high interest rates and rising construction material prices, but Daejo District 1 is a quite unusual case,” adding, “The position of union president is virtually vacant.” “The union failed to properly pay the construction cost to the construction company, and it is difficult to find a redevelopment site where construction has been in progress for over a year,” he said. This expert said, “The recent poor real estate market and high construction costs are also a big problem. Fortunately, even if construction begins again, there is a possibility that another conflict may arise as union members’ contributions increase,” he pointed out.
The Daejo District 1 union members we met at the site were reluctant to talk specifically about the suspension of construction or the internal conflict within the union. The atmosphere in the local community and union members is said to be “a situation of tension, as if if you put a needle on a balloon, it would burst.” Those who responded to the interview raised their voices by mentioning the names of some union executives and members of the emergency response committee, saying, “We must take responsibility for the suspension of construction,” and “We must normalize the union as soon as possible.” It is said that there is ongoing debate among union members regarding future response plans after Hyundai Engineering & Construction halted construction. Union members explain that hundreds of like-minded people are creating a new group Kakao Talk room to exchange opinions. A union member who attended an information session held by Hyundai Engineering & Construction in December last year to inform people of the construction suspension said, “I thought something was going to explode in the end, but I had a glimmer of hope that the actual construction suspension could somehow be avoided, but that was not the case.” Another union member said, “I hope construction can be completed normally as soon as possible. He complained, “It’s okay to raise the construction cost per pyeong (3.3㎡), so shouldn’t we build the house quickly anyway?” An official from a nearby real estate agent office said, “There were 1-2 purchase inquiries after the construction stoppage was reported in the media, but it is difficult for a transaction to actually take place in this situation.” He added, “Only when redevelopment proceeds smoothly can a nearby real estate agent office buy it as well.” “It’s frustrating because I don’t know when construction will return to normal,” he said.
Hyundai Engineering & Construction “Determines that construction will be difficult due to the absence of union executives”
Daejo District 1 redevelopment site, where construction has been halted. [김우정 기자]
Is there any possibility that construction of Daejo District 1 will resume in the future? In a phone call with a reporter on January 3, a Hyundai Engineering & Construction official said, “We have decided that it is difficult to proceed with the construction stably due to the absence of the association’s executive team, so we are halting the construction and inevitably exercising our lien rights.” “I will do my best to allow my construction to resume,” he said. However, he avoided giving a specific answer to questions about future normalization plans. An official in the construction industry said, “The reason a company as large as Hyundai Engineering & Construction has decided to suspend construction is not only because of the unpaid construction cost of 180 billion won, but also because of a growing sense of distrust that the site will not be able to continue operating if the redevelopment combination is not normalized. “It may be because of this,” he said. “In the case of the Daejo District 1 incident, the main cause is the union’s chaos, so the union and its members have no choice but to solve the problem on their own.”
〈This article was published in Weekly Donga No. 1422〉
Reporter Kim Woo-jeong [email protected]
2024-01-06 01:37:00
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