Yongsan Auction Buzz... Old House Sold at Twice the Appraised Value

[Asia Economy Reporter Onyu Lim] The Yongsan court auction market is buzzing. Since the government announced plans to build a mini new town-scale apartment complex with 8,000 units on the site of the Seoul Yongsan Station railroad maintenance depot, high-price bids have continued. It is analyzed that real estate acquired through auctions is excluded from land transaction permit requirements, attracting investment demand.

According to Gigi Auction on the 3rd, 45 people participated in the auction of a detached house located in Hangangno 2-ga, Yongsan-gu, Seoul, the previous day. The winning bid for this small house, with a land area of 46㎡ and a building area of 29㎡, was 1,213,892,000 KRW, more than double the appraised value of 608,860,000 KRW.

This detached house, located a 3-minute walk from Samgakji Station, a transfer station for Seoul Subway Lines 4 and 6, was built as a single-story building in the 1980s. The large number of bidders in the auction is believed to be influenced by the development plan for the Yongsan Station maintenance depot site.

The Ministry of Land, Infrastructure and Transport announced earlier last month that it would develop the Yongsan Station maintenance depot site to supply 8,000 apartment units. After signs of a rapid rise in Yongsan real estate prices, 13 redevelopment and reconstruction districts in the area were designated as land transaction permit zones. In these zones, when trading land exceeding 18㎡ in residential areas or 20㎡ in commercial areas based on land area, permission from the district office is required. Buyers of houses or commercial buildings in these zones must reside or operate a business there for at least two years.

The auctioned property is also located within the northern side 1 district of Sinyongsan Station, designated as a land transaction permit zone. In this area, where the zoning is general commercial, houses with land areas exceeding 20㎡ are subject to land transaction permits. However, under the Civil Execution Act, auctions are granted special exceptions and are considered to have obtained permission for land transaction contracts.

Earlier, on the 12th of last month, just before the government designated the Yongsan area as a land transaction permit zone, a three-story neighborhood house in Cheongpa-dong 1-ga, Yongsan-gu, Seoul (building area 273.4㎡, land area 95.9㎡) was auctioned with 42 bidders, selling for 1,460,000,000 KRW, 60% higher than the appraised value of 914,319,500 KRW.

Myungwon Oh, senior researcher at Gigi Auction, explained, "Unlike general sales, auctions are not subject to land transaction permit requirements, which seems to have led to many bidders and high winning bids."