Home > Business > Economy

37 apartment complexes canceled in two years as bankruptcies plague construction industry

Published: 03 Jun. 2025, 19:55

An apartment complex in Yongin, Gyeonggi, remains abandoned for over 20 years after construction was halted. [YONGIN CITY GOVERNMENT]

Korea's skyline is beginning to crack — quietly — as the nation's construction industry collapses. Dozens of half-built apartment complexes now sit abandoned, victims of a growing wave of bankruptcies among midsize developers and a housing market that’s running out of buyers.

Since 2023, construction at 37 apartment building construction sites has come to a halt. This year alone, two more projects — Yedaum Urban Forest in Gangneung, Gangwon, and Yongam Yeongmu Yedaum The First in Yangju, Gyeonggi — were classified as “guarantee accidents” on May 20 after the developer, Youngmu Construction, asked to be put into receivership, the Korea Housing and Urban Guarantee Corporation (HUG) said Tuesday.

That designation triggers action from HUG, which refunds deposits and interim payments to buyers but often leaves actual structures behind. So far, only 16 out of 45 projects affected since 2020 have found new life. The rest remain frozen in time.

These modern ruins, once marketed as dream homes for Korean families, are quickly turning into economic sinkholes and social hazards. In Gunsan, North Jeolla, and Jeju, apartment blocks halted in 2020 are still being auctioned. Others, like one complex in Incheon that broke ground in 2003, have stood empty for longer than 20 years.

Construction workers carry out tasks at a new apartment construction site in Seoul on May 1. [NEWS1]

HUG, the government-backed insurer of housing projects, is buckling beneath the pressure. The agency has racked up three straight years of deficit, accumulating a net loss of nearly 6.8 trillion won ($4.9 billion) fueled by defaults and rampant rental fraud.

Worse still, the market isn’t showing signs of recovery. Subscription rates for the two latest failed projects were dismal at just 0.16:1 and 0.09:1, a clear sign that buyers are fleeing regional housing projects. Even the fallback strategy of converting unsold units into rentals is beginning to collapse, with rental guarantee accidents on the rise.

There were no apartment guarantee accidents in 2021 or 2022. However, since 2023, as the construction industry began to falter, such incidents have surged. In the past 29 months, there have been 37 cases with total compensation exceeding 2.4 trillion won.

Of the 45 sites that experienced guarantee accidents since 2020, only 16 have either resumed construction or been sold off, according to documents HUG submitted to conservative People Power Party Rep. Eom Tae-young. The remaining 29 sites remain abandoned.

Pictured is a construction site for an apartment complex in Seoul on Feb. 18. [NEWS1]

The system, once designed to provide stability, is now in triage. HUG is preparing another emergency briefing next month — its third since mid-2023 — in hopes of finding buyers for abandoned sites. But demand continues to shrink in the face of rising costs, population decline and falling profit margins.

The I’Park apartment in Gwangju, which collapsed and killed six construction workers and injured one in 2022, remains standing on Jan 9, 2024. [YONHAP]

“While construction costs continue to rise, demand is shrinking due to population decline and waning development profit, leading to more unsold units and construction suspensions,” said Lee Chang-moo, a professor of urban engineering at Hanyang University. “Sites left idle for years can become not only eyesores, but also breeding grounds for crime and safety hazards. In severe cases, local governments should consider forced demolition.”

Translated from the JoongAng Ilbo using generative AI and edited by Korea JoongAng Daily staff.
BY LEE-HYUN [[email protected]]