[Edaily Reporter LEE JUNGHYUN ] A residential redevelopment project site that underwent a feasibility review of construction costs last year. Although the original construction contract between the residents’ association and the contractor was for 231.1 billion won, the contractor presented a request for a cost increase of 744.4 billion won—more than three times (322.2%) the original amount. However, a verification by the Korea Real Estate Board found that approximately 64.2 billion won of the contractor’s requested amount was deemed an unfounded “bubble.”

It has been revealed that, out of the 25 trillion won in construction cost increases demanded by contractors at reconstruction and redevelopment sites over the past five years, more than 5 trillion won was not approved during the Korea Real Estate Board’s verification process. However, critics point out that the construction cost verification system is effectively “a dead letter” because it lacks legal binding power, and it is difficult to verify whether the cuts—amounting to trillions of won—were actually reflected in the final construction contracts.

According to the “Results of Construction Cost Verification for Urban Renewal Projects” data submitted by the Korea Real Estate Board to Rep. Kim Mi-ae of the People Power Party—a member of the National Assembly’s Land, Infrastructure, and Transport Committee—on the 28th, out of the 24.9889 trillion won in cost increases requested by contractors across 201 urban renewal projects verified from 2021 through this year, the Korea Real Estate Board approved only 19.8284 trillion won. A total of 5.1605 trillion won—20.7% of the requested increase—was deemed an inflated claim and was not approved.

There were also numerous projects where contractors’ excessive billing was a serious issue. In the case of one reconstruction project verified in 2026, the contractor requested a cost increase of 210.9 billion won, but a staggering 77.0%—or 162.4 billion won—was rejected. Out of a total of 201 projects, 10 alone had rejected amounts exceeding 100 billion won, and in one single project, a whopping 191.7 billion won was cut in a single instance. Five projects were found to have requested cost increases that exceeded their original contract amounts—so-called “cases where the tail wags the dog.”

The ratio of requested cost increases to the original contract amount is also skyrocketing. This is because construction costs continue to rise due to design changes and increases in material and labor costs. In fact, based on all sites subject to verification, the ratio of requested cost increases—which stood at 21.2% in 2021—is rising annually, reaching 48.3% in 2024, 51.5% in 2025, and 54.4% in 2026.

The problem is that even though the government has determined that more than 5 trillion won of the cost increases requested by contractors over the past five years constitute “excessive markups,” it is difficult to ascertain whether this has actually led to a reduction in the actual contributions paid by housing association members. The Korea Real Estate Board’s construction cost verification system was introduced in 2019 to mediate disputes over construction costs between contractors and housing cooperatives, but it lacks enforceability and has no provisions for post-verification monitoring. Industry observers point out that when contractors use threats such as halting construction to exert pressure, housing cooperatives often end up abandoning their demands for cost reductions.

Rep. Kim Mi-ae pointed out, “Since over 5 trillion won was not recognized in the public agency’s verification, we must be able to verify how the verification results were actually reflected in the contracts to properly assess the system’s effectiveness.”

She continued, “Disputes over construction costs lead to work stoppages and delays in occupancy, and that enormous burden ultimately falls on association members and general homebuyers,” emphasizing that “the Ministry of Land, Infrastructure and Transport and the Korea Real Estate Institute must promptly establish a system to transparently verify and disclose how verification results are reflected in actual contracts to enhance the system’s effectiveness.”