"We excluded the shopping center to avoid conflict, but ended up facing two lawsuits and 40 complaints"

[Financial News] A dispute over commercial facilities has erupted at Daekyo, a leader in Seoul's Yeouido redevelopment projects. Daekyo has sought to accelerate reconstruction by excluding the shopping centers, but conflicts with some commercial-property owners appear to be escalating into lawsuits.
According to sources in the redevelopment industry on the 29th, the Daekyo Apartment Reconstruction and Maintenance Project Association recently notified its members about the lawsuits and complaints involving A Shopping Center. The association said that some sectional owners of A Shopping Center are currently pursuing a lawsuit seeking to revoke the project implementation approval for the Daekyo apartment reconstruction project. They also filed a separate lawsuit in August seeking to revoke the approval of the management and disposal plan. In addition, about 40 complaints related to A Shopping Center have recently been submitted, according to the association.
The association consequently announced that it would no longer consider integrated reconstruction with A Shopping Center. In its notice, the association stated, "The repeated lawsuits and complaints have created burdens and costs for the progress of the project." It added that if the disputes result in costs or damages for the association, it would also consider legal action, including claims for litigation costs and damages.
Daekyo is the fastest-moving project among the redevelopment complexes in Yeouido. It is the first to receive approval for its management and disposal plan and is scheduled to begin relocation procedures this October, two years and seven months after receiving approval to establish its association in January 2024.
One factor behind the project's rapid progress is that the apartment complex and the shopping centers are located on separate lots. Daekyo Apartment Complex is located at Lot 41 in Yeoui-dong, B Shopping Center at Lot 41-1, and A Shopping Center at Lot 41-2. This arrangement allows the apartments to be reconstructed without including the shopping centers.
From the early stages of the project, the association pursued reconstruction of the apartment complex alone, believing that an integrated project could require time to reconcile competing interests over the composition of association membership and the allocation of presale rights. At the time, Daekyo had about 560 apartment association members, while the owners of A and B Shopping Centers numbered more than 70. If the properties had been integrated, commercial-property members would have accounted for more than 10% of the association. The association excluded the shopping centers to reduce the potential for conflict, as integrated reconstruction could have made the decision-making process more complicated.
More redevelopment complexes are now separating commercial facilities from reconstruction projects when reaching an agreement with their owners proves difficult. Mokdong 8th Apartment Complex in Yangcheon District received approval to establish an association while excluding the shopping center. Daechi Woosung 1st Apartment Complex in Gangnam-gu excluded the shopping center's land from the maintenance district after filing a land-division lawsuit when talks with the commercial-property side broke down. However, as the Daekyo case shows, the possibility of disputes remains even when reconstruction proceeds without the shopping centers. Separating or excluding commercial facilities from a project can still leave associations burdened with managing conflicts, including lawsuits and complaints.
An official in the redevelopment industry said, "Excluding the shopping center from the project does not eliminate the possibility of related disputes." The official added, "Even after the separation, rights-related issues and responses to lawsuits and complaints can affect the project schedule."
[email protected] Choi A-young Reporter