Seoul City "Immediate Designation Upon Detecting Overheating"
Ministry of Land Also Deploys Response Team for Speculation Investigation
[Asia Economy Reporter Onyu Lim] The Seoul Metropolitan Government is expected to designate the area around Jamsil Sports and MICE (Meetings, Incentives, Conventions, and Exhibitions) project site near Sports Complex Station as a land transaction permission zone.
On the 5th, Seoul City announced that as the Jamsil Sports and MICE project gains momentum, it will strengthen monitoring of real estate transactions in the surrounding areas, including Jamsil-dong in Songpa-gu and Samseong-dong in Gangnam-gu, centered around Sports Complex Station. This decision is based on the judgment that buying sentiment is being stimulated by development prospects and there is a high possibility of speculative demand inflow. The city plans to immediately designate the project site and surrounding areas as land transaction permission zones if signs of overheating are detected through monitoring.
Once designated as a land transaction permission zone, acquiring land exceeding a certain area by use type?residential, commercial, or industrial?requires prior approval from the mayor or district office head. Only actual users such as residents for housing and self-employed individuals for commercial properties can acquire land, and the land must be used for the approved purpose for a certain period. Contracts made without permission will be invalid.
In particular, since the government previously designated the area around Yongsan Station’s railway maintenance depot as a permission zone and set legal minimum units for approval?18㎡ for residential areas and 20㎡ for commercial areas?similar standards are expected to be applied around Jamsil. In this case, many surrounding apartments will also be subject to approval, making purchases for investment purposes rather than actual residence impossible. Industry insiders also speculate that the designated area could include not only Songpa-gu, where the Sports Complex is located, but also Samseong-dong and Daechi-dong in Gangnam-gu.
Kim Seonsun, Director of the Regional Development Headquarters at Seoul City, said, "The Jamsil Sports and MICE project is a core project for continuously strengthening Seoul’s urban competitiveness," adding, "To block speculative demand inflow following the project’s full-scale promotion, we will thoroughly implement anti-speculation measures through cooperation with related agencies such as the Ministry of Land, Infrastructure and Transport."
The Ministry of Land, Infrastructure and Transport also announced that it will deploy the Real Estate Market Illegal Activities Response Team and the Korea Appraisal Board’s permanent real transaction investigation team to conduct a planned investigation of real transactions in the Jamsil Sports and MICE project area. The investigation will focus on transactions involving minors, up-down contracts, unclear sources of funds, speculative corporate transactions, and insufficient submission of supporting documents such as income and balance certificates.
Kim Younghan, Director of Land Policy at the Ministry of Land, Infrastructure and Transport, said, "Due to recent large-scale development plans in Seoul, such as the Jamsil MICE development project and the Yongsan maintenance depot housing supply plan, there are concerns about market overheating," adding, "We will thoroughly detect speculative and illegal transactions through planned real transaction investigations and respond firmly."
The Jamsil Sports and MICE project aims to develop a 334,605㎡ site around Jamsil Sports Complex, a key axis of the international exchange complex district stretching from Jamsil to COEX, into a MICE hub integrating sports, exhibition, convention, and entertainment facilities. With a total project cost of 2.228 trillion KRW, it will include an exhibition and convention center (120,000㎡), a baseball stadium (35,000 seats), a sports complex (11,000 seats), a swimming pool (5,000 seats), waterfront leisure facilities (70 vessels), and a hotel (900 rooms with cultural, commercial, and office facilities). Construction is targeted to begin in the second half of 2022, and following the completion of the eligibility review on the 28th of last month, Seoul City plans to announce a third-party proposal within the year. The preferred negotiation partner will be selected in the first half of next year.
Since Seoul City announced the master plan in 2016, the value of surrounding real estate has rapidly increased. This area is influenced not only by the Jamsil Sports and MICE project but also by complex factors such as Hyundai Motor Group’s Global Business Center (GBC) in Samseong-dong and the Yeongdong-daero underground complex development.
For example, the actual transaction price of a 134㎡ apartment in the Asia Athletes’ Village opposite Jamsil Sports Complex rose sharply from around 1.5 billion KRW in 2015 to 1.8 billion KRW in 2016, then to 2.3 billion KRW in 2017, and surpassed 2.8 billion KRW in 2018. In November last year, it recorded a new high of 3 billion KRW. Similarly, the price of an 85㎡ unit in Jamsil Els in Jamsil-dong doubled from 1 billion KRW to around 2 billion KRW during the same period. However, due to tightened loan regulations and the economic downturn caused by the COVID-19 pandemic, recent actual transaction prices have fallen by about 100 to 200 million KRW.
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