5 Key Points to Consider in Urban Transformation

5 Key Points to Consider in Urban Transformation

Urban transformation projects offer important opportunities for cities to become safer, healthier, and more modern living spaces. However, these processes also involve certain risks and complexities for both property owners and contractors. Below are five key points to consider during an urban transformation process:

1. Identification of Risky Structures and Regulatory Compliance

• Accurate assessment and report: A building must be classified as a risky structure through a risk assessment report prepared by licensed organizations authorized by the Ministry of Environment, Urbanization and Climate Change. This report covers technical aspects such as structural integrity, construction issues, and local geological/soil risks.

• Compliance with building and planning requirements: Zoning status, subdivision/merger regulations, building area, and floor limits must comply with planning regulations. The area of the building must match local government plans, and legal obligations must be fulfilled.

2. Transparency and Details of the Contract

• Build-and-share / revenue-sharing agreement: The legal validity of the contract between property owners and contractors is crucial. The agreement should clearly specify which independent units belong to whom, which land shares are transferred for compensation, and whether there are premium differences.

• Technical specifications and project details: Materials, quality standards, final project plans (instead of preliminary plans), floor layouts, and unit positions must be clearly defined. Contractor obligations, delivery timelines, and penalties for delays should also be specified.

3. Time Management, Permits, and Approvals

• Complete permits and approvals: Before construction begins, all necessary permits such as building permits and occupancy permits must be obtained. Ensuring the project complies with permits is critical for regulatory compliance.

• Timeline commitments and delivery dates: Start and completion dates, delivery stages, and penalties for delays or failure to deliver must be clearly stated in the contract. Responsibilities in case of delays or unmet conditions must be determined in advance.

4. Protection of Rights of Owners and Stakeholders

• Majority decisions & minority rights: Decisions may require a majority among unit owners (e.g., 2/3 majority). Voting rights, ownership percentages, and shares should be clearly defined. The rights of minority stakeholders should be protected by law and within the contract.

• Relocation assistance and moving process: Terms regarding temporary relocation, accommodation, and rental assistance for owners or tenants should be clearly specified, including responsibilities, duration, and compensation.

5. Financial Security and Contractor Selection

• Contractor competence and capital: The contractor’s past projects, references, financial status, and available resources to complete the project should be assessed. Licensing and qualifications must be verified.

• Guarantees and assurances: Financial guarantees must be provided to ensure the contractor fulfills obligations toward property owners. Compensation mechanisms for delays or incomplete work should be included in the contract. Responsibilities regarding construction insurance and safety measures should also be clearly assigned to the contractor.

Urban transformation is a significant opportunity but also a complex process with legal, technical, and financial dimensions. The five points outlined above help ensure that the process proceeds safely, transparently, and fairly: risk identification & regulatory compliance, contract details, permits & timeline management, protection of owners’ rights, and financial security & contractor selection.