[비즈한국] The redevelopment project for Sewoon District 4 in front of Jongmyo Shrine has fallen into a stalemate as the Seoul Metropolitan Government pushes for an easing of height restrictions. Due to frequent plan changes and the review of increased height limits, the developer, Seoul Housing & Communities Corporation (SH), has been unable to finalize the design, and the project—originally targeted for completion in 2024—is now adrift. In particular, the contractor, Kolon Global003070, faces the expiration of its construction contract this month without even having received an order to break ground. Critics point out that the Seoul Metropolitan Government’s aggressive pursuit of height limit relaxation has ironically resulted in project delays.
The construction contract for the Sewoon District 4 urban environment maintenance project, signed between SH and Kolon Global, expires on the 26th of this month. Although five years have passed since the contract was signed in January 2019, the construction has not even broken ground. It is reported that SH and Kolon Global are currently discussing ways to extend the contract.
The Sewoon District 4 maintenance project is considered the largest redevelopment project within Seoul's historic city walls. Although the urban environment maintenance project was announced in 2004, height restrictions in front of Jongmyo Shrine became a major obstacle. Later, with the height limits fixed at 55m near Jongno and 71.9m near Cheonggyecheon, the project gained momentum after receiving business implementation authorization in 2018.
However, the project has faced repeated setbacks since then. A plan change excluding two hotel buildings was made in 2021, and the excavation of archaeological remains revealed a cultural layer from the early Joseon Dynasty that was older than expected, extending the investigation period. Amid these variables, the Seoul Metropolitan Government announced a 'Notice of Change to the Redevelopment Promotion Plan' on October 30, raising the height limit to 145m, which has effectively pushed the project back to square one.
Since a design plan reflecting the new height standards has not yet been prepared, it is difficult to estimate when construction will begin. A Kolon Global official stated that they have not yet received any instructions regarding the start of construction from SH.
The excavation investigation has also not been completed. Although the on-site investigation ended last December, the deliberations by the Korea Heritage Service committee have been stalled because SH has not submitted a preservation plan to the agency. An official from the Korea Heritage Service explained, "While the broad framework for what needs to be preserved has been settled, the final measures can only be decided once SH submits the preservation plan." The reason for SH's failure to submit the plan appears to be the delay in finalizing the design.
These difficulties are viewed as an unexpected negative factor for Kolon Global, which has been considered one of the biggest beneficiaries of Seoul's policies to date.
Starting with the 2022 Beondong street housing maintenance project, which was integrated into Mayor Oh Se-hoon’s ‘Moa Town’ initiative, giving the company an opportunity for large-scale development, Kolon Global has consecutively won multiple Moa Town projects in areas such as Myeonmok 5-dong, Cheonho-dong, and Majang-dong. At the end of last year, it even secured the Sangbong District 7 project, with a construction cost of 428.4 billion won, the largest contract amount in the history of the company's urban maintenance business.
Kolon Global has also been cooperative with Seoul's policies. In 2023, it participated in a pilot project for construction site video recording management to prevent poor construction, and in 2022, it was involved in a 'staged bidding' controversy while competing with the major construction firm HDC Hyundai Development Company294870 for the reconstruction of the Dongshin Apartment in Wolgye-dong, Nowon-gu.
However, the Seoul Metropolitan Government's push for height limit relaxation is now resulting in constraints on Kolon Global's core business. For Kolon Global, which has been seeking to improve its financial structure by strengthening its non-residential sector, the Sewoon District 4 project is known to be a crucial undertaking. The longer the project delay, the greater the burden on the company.
Regarding this, a Kolon Global official stated, "We understand that the costs incurred due to the construction delay will be compensated by the Seoul Metropolitan Government and the ordering agency, SH," adding, "Every construction company is aware that building in downtown Seoul is difficult due to cultural heritage sites."