Cars are covered with concrete in the collapsed underground parking garage of Lotte Castle Lewest's serviced apartment complex that is being constructed by Lotte E&C in Seoul, Friday. Yonhap

Lotte E&C CEO Park Hyun-chul

Lotte E&C is witnessing a deterioration of the image regarding its apartment brand, Lotte Castle, after the recent collapse of one of its underground parking garages at a serviced apartment complex in western Seoul, according to industry officials, Wednesday.

Last Friday, two workers were injured in an accident while carrying out concreting work at the parking garage of Lotte Castle Lewest, which is comprised of five 15-story buildings with six underground floors.

Following the accident, buyers of its apartment units urged the Gangseo District Office on Wednesday to order Lotte E&C to halt construction and conduct a thorough safety inspection. However, both the district office and the construction firm denied there being enough defects to warrant a halt in construction.

"Concrete flowed down while filling a hole used to move materials from the upper to lower floors," a Lotte E&C official said. "The accident differs from the collapse of an underground parking garage of an apartment complex under construction by GS E&C in Incheon."

The company added that it would resume construction after checking the safety of the building.

Buyers of Lotte Castle Lewest serviced apartment complex hold a rally at the Gangseo District Office in Seoul, Tuesday. Newsis

Last month, the apartment buyers asked a court to order the cancelation of their contracts with Lotte E&C as well as receive compensation from the construction firm, as they were not allowed to reside in the rooms that they had bought.

In 2021, the government revised the Enforcement Decree of the Building Act to prohibit the use of serviced apartments as houses. Therefore, Lotte Castle Lewest's use should be similar to that of a hotel once its construction is finished in August.

If the buyers live in the facility, they will have to pay annual fines equivalent to 10 percent of the prices of their serviced apartment units. In addition, the government's measure prompted banks to reduce the maximum amount of mortgages being lent to buyers.

The buyers claimed that Lotte E&C had promoted the serviced apartments as a place where they could live full time. Before the lawsuit, the buyers held a series of rallies denouncing the construction firm.

However, Lotte E&C refuted the claim, saying that the buyers were aware of the fact that they could not use the facility as their primary home.

When the company sold the rooms in 2021, the price of a 49-square-meter room reached up to 962 million won ($704,000). The price of an 88-square-meter room cost 1.7 billion won.

Despite the controversy about the facility's valuation, 575,950 people participated in bids for 876 serviced apartment units, as the nation's housing market was overheated at that time.