"At Least KRW 100 Million in Relocation Compensation"... Eunma Shopping Center Tenants Demand Key-Money-Level Payments, Emerging as a Redevelopment Variable

[Financial News] As the redevelopment of Eunma Town Apartments gathers pace with the goal of beginning relocation in the first half of next year, compensation demands from commercial tenants have emerged as a potential variable. Although redevelopment associations are not legally required to pay business-loss compensation or moving expenses to commercial tenants, delays in relocation could increase the association’s financing costs as the tenants demand relocation payments.
According to News1 on the 15th, the Eunma Town Apartments Redevelopment Association sent a document titled “Notice Regarding the Eunma Shopping Center Relocation Plan” to tenants of Eunma Shopping Center early last month. The document stated that, because the association aims to begin relocation in the first half of next year, the shopping center must also complete its relocation during the same period.
The issue is compensation. The association emphasized that, under current law, it would be difficult to compensate tenants for losses or expenses incurred when they leave the shopping center. However, the tenants maintain that they need at least basic relocation measures because they are being forced to leave businesses they have operated for as long as 30 years.
The tenants formed the Emergency Countermeasures Committee of Eunma General Shopping Center and are calling for relocation measures. According to the committee, about 60% of the roughly 450 stores in the shopping center are participating in its activities. The tenants are reportedly considering the level of commercial key money from 10 years ago as the basis for calculating relocation compensation. Local licensed real estate agents said commercial key money in the area stood at around KRW 100 million to KRW 150 million in 2016.
The association is reportedly not considering paying relocation-related expenses to the commercial tenants because there is no legal basis for doing so. However, some experts monitoring the situation believe the association could choose to provide a certain level of relocation compensation if financing costs caused by delays exceed the cost of compensation.
Kim Ye-rim, managing attorney at Simok Law Firm, told News1, “Redevelopment projects do not basically guarantee protection for tenants, so any payments would come out of the association members’ funds.” She added, “If relocation is delayed, the cost of relocation loans alone could exceed KRW 1 billion per month.” This means that if delays in relocating the shopping center affect the overall relocation and construction schedules, the interest burden from relocation loans for association members could also increase.
Kim continued, “If the financial burden grows, the association may decide that it would be better to provide at least some compensation and encourage relocation.” She added, “The association will make the final decision after following procedures such as a general meeting.” Eunma Town Apartments received approval for its project implementation plan in July and is accelerating the project with the goal of beginning construction in 2028.
Meanwhile, the committee denied reports that it might engage in extreme actions, such as installing explosives. A committee representative said, “I do not know who spread such claims, but they are completely untrue.” The representative emphasized, “We have only come forward to secure a minimum livelihood; we are not trying to block the project.”
[email protected] Kim Hee-sun Reporter