Reconstruction costs near W10m per 3.3 square meters beyond Han River prime zones

Construction costs approaching 10 million won per 3.3 square meters are no longer confined to prime Han River redevelopment zones such as Banpo, Yeouido and Apgujeong — they are now appearing across Seoul. A reconstruction project in Ogeum-dong, Songpa-gu is seeking a contractor at a per-unit cost in the high 9 million won range, while costs of around 10 million won are also being quoted at sites in the Mok-dong Sinsigage apartment district, where contractor selection is now under way at 14 complexes. Surging construction costs driven by high oil prices, high interest rates and a weak won have fed directly into rising pre-sale prices.

According to industry sources, the Ogeum Hyundai Reconstruction and Improvement Project Association in Ogeum-dong, Songpa-gu posted a contractor tender notice on Tuesday. The association set the construction cost at 9.62 million won ($7,070) per 3.3 square meters, putting the total project cost at 1.66 trillion won.

Another reconstruction site in Ogeum-dong — Garak Sang-a 1st — completed contractor selection in 2022 at 7.05 million won per 3.3 square meters, while Bangi Daelim, directly across the street from Ogeum Hyundai, wrapped up the same process in early last year at 8.4 million won. Differences in design and scale between complexes aside, construction costs have risen sharply over just a few years.

The sustained rise in construction costs reflects a combination of global headwinds and domestic pressures, including higher labor costs. Prolonged geopolitical risks — the Russia-Ukraine war and conflicts in the Middle East — have driven up oil prices and international raw material costs, which in turn sent prices for core construction materials such as cement, rebar and aggregate soaring. A persistently weak won has compounded the burden by raising the cost of imported materials.

On top of rising material costs, an aging population and a shortage of skilled workers have pushed on-site labor costs sharply higher, while strengthened enforcement of the Serious Accidents Punishment Act has added to legal and regulatory compliance costs, analysts say.

The trend is borne out in official data. The Korea Institute of Civil Engineering and Building Technology's Construction Cost Management Center recorded a construction cost index of 138.59 (provisional) in July, an all-time high. Lee Ji-hye, a research fellow at the Korea Construction Industry Institute, said the index had risen for 12 consecutive months since August 2025, reflecting persistent downward rigidity in construction costs. "Cement and ready-mixed concrete have been broadly stable, but the producer price index and market price index for general rebar surged 9.9 percent and 18.3 percent year-on-year, respectively, keeping material cost pressures elevated," she said.

Construction costs in the vicinity of 10 million won per 3.3 square meters are appearing at major redevelopment sites across Seoul beyond the Ogeum Hyundai project. Among sites that have posted contractor tender notices this year, the long-term jeonse housing urban redevelopment project near Sookmyung Women's University Station in Galwol-dong, Yongsan-gu came in at 9.3 million won, and the Macheong District 1 redevelopment in Macheong-dong, Songpa-gu at 9.31 million won. Mok-dong Complex 13 in Yangcheon-gu, which posted its tender notice this month, set the figure at 9.8 million won, while Mok-dong complexes 6, 8 and 10 earlier quoted 9.5 million won, 9.65 million won and 9.9 million won, respectively. Mok-dong Complex 4 announced a cost of 10.1 million won — the first complex within the Mok-dong Sinsigage apartment district to cross the 10 million won threshold.

In the Yeouido area, where high-end supertall reconstruction projects are being pursued along the Han River, upward pressure on construction costs is even steeper. Yeouido Mokhwa Apartments, which closed its contractor tender earlier this month, posted a construction cost of 13.7 million won per 3.3 square meters.

The surge in construction costs is translating directly into upward pressure on pre-sale prices. As higher construction costs push up the additional contributions required from existing members and raise general pre-sale prices, the floor for new apartment pre-sale prices across Seoul is rising — making homeownership increasingly out of reach for end-users.

The Korea Housing and Urban Guarantee Corporation reported that the average pre-sale price per square meter for privately built apartments newly offered in Seoul over the past year stood at 19.02 million won as of end-August — a 34.2 percent increase from the same month a year earlier. Converted to a per-3.3-square-meter basis, the Seoul average pre-sale price comes to 62.87 million won.

An official at a major construction company said the sharp rise in construction costs driven by material and labor expenses is worsening the financial viability of redevelopment projects across the board. "From the association's perspective, the only way to improve project economics and reduce member contributions is to raise the general pre-sale price — which means new apartment pre-sale prices are structurally bound to keep climbing," the official said.