The Real Estate Market Landscape Changed by 50 Days of COVID-19

Model homes revealed on YouTube
Contracts signed without seeing the actual house

[Asia Economy Reporter Donghyun Choi] More than 50 days have passed since the first confirmed case of the novel coronavirus infection (COVID-19) in South Korea on January 20, and the real estate market has undergone many changes. In the pre-sale market, cyber model houses have become the trend, and in the sales and lease markets, the footsteps of visiting houses through real estate agents have sharply declined. In the maintenance industry, the ripple effects are significant enough that there is even debate over whether to hold general meetings ahead of the implementation of the private land pre-sale price ceiling system.

◆ Construction Companies' Model Houses Move to the Internet and YouTube = According to the industry on the 11th, starting with Daewoo Construction and SK Construction's 'Suwon Maegyo Station Prugio SK View' and Joongheung Construction's 'Wirye New Town Joongheung S-Class' on the 14th of last month, seven complexes pre-sold in the metropolitan area until the day before are operating cyber model houses. Construction companies opening cyber model houses are increasing not only in the metropolitan area but also in local cities such as Daegu and Busan.

Upon entering the cyber model houses, construction companies were providing information such as interior photos taken with virtual reality (VR) cameras and computer graphics-based complex layout maps. In addition, advantages such as the complex location and specialized designs were disclosed using methods that maximize visual effects.

In the case of GS Construction, on the 21st of last month, they opened the 'Gwacheon Jade Xi' cyber model house and simultaneously conducted a YouTube live broadcast. The live broadcast video posted on GS Construction's YouTube channel 'Xi TV' currently has accumulated about 65,000 views. Approximately 2,800 people participated in real-time during the live broadcast. A source from the pre-sale industry said, "Cyber model houses are effective in preventing the spread of COVID-19 and reducing costs, so they will likely spread like a trend for the time being," adding, "However, phone and email inquiries have surged, increasing the workload of frontline call center staff."

◆ Buyers and Sellers Exchange Photos and Videos... Some Contracts Signed Without Seeing the House = Office worker Kim Yuwon (27, pseudonym) recently signed a lease contract for a 49㎡ (exclusive area) apartment in Junggye-dong, Seoul, without seeing the house in person. The current tenant refused visits by the real estate agent and prospective buyer and wanted to show the house only through photos and videos. Kim put down a deposit of 20 million won under the condition of a significant discount on brokerage fees. Kim said, "I checked everything like water pressure and option defects through videos, but I worry if I missed anything," adding, "I thought there would be no major problems if I carefully checked special terms and the register, so I signed the contract."

Real estate agents also agreed that visitors have significantly decreased recently. The representative of real estate agency A in Yeongdeungpo-dong, Seoul, said, "Due to COVID-19, requests for interior photos of houses have increased significantly compared to before," adding, "Since these are personal information, we provide them only after obtaining consent from tenants or sellers." The representative of real estate agency B in Ichon-dong lamented, "Transactions have greatly decreased since the December 16 real estate measures, and with the COVID-19 situation overlapping, it is practically a business suspension."

◆ "Should We Hold General Meetings When the Pre-sale Price Ceiling System Is About to Be Implemented?" = In the maintenance industry, there is ongoing controversy over whether to hold general meetings related to reconstruction and redevelopment amid the COVID-19 aftermath. Especially for complexes exempted from the pre-sale price ceiling system, since the resident recruitment announcement must be made by April 28, there is deep concern over whether to proceed with the meetings.

According to the industry, there are 12 major reconstruction and redevelopment complexes in Seoul scheduled for pre-sale in April. The redevelopment projects in Heukseok 3 District, Dongjak-gu, and Sangye 6 District, Nowon-gu, held general meetings last month to avoid the application of the price ceiling system. Gaepo Jugong 1 Complex also plans to hold a general meeting at the end of this month to change the management disposition plan. However, some associations are increasingly voicing the need to postpone meetings due to concerns over the spread of COVID-19. According to Article 45 of the Urban and Residential Environment Maintenance Act, a general meeting is valid only if more than 20% of association members attend in person. It cannot be replaced by electronic voting or other methods. Gangnam District Office recently sent an official letter to the Ministry of Land, Infrastructure and Transport and Seoul City requesting an extension of the exemption period for the price ceiling system. A Ministry of Land official stated, "We are currently assessing the schedules of association general meetings and will consider whether to postpone the application of the price ceiling system."