Same Jamsil, but... Joy and Sorrow Depending on Whether It's the East or West Side of Songpa-daero

First Day of Land Transaction Permission Zone Enforcement
Jamsil, Samsung, Daechi, Cheongdam-dong Areas
Excluding Parkrio, Jangmi Apartments, and Others

[Asia Economy Reporter Moon Jiwon] From the 23rd, the Land Transaction Permission System has been implemented in Jamsil-dong, Songpa-gu, Seoul, and the areas of Samseong, Daechi, and Cheongdam-dong in Gangnam-gu. Industry insiders are already voicing concerns that a "balloon effect" could shift to popular apartment complexes in nearby non-regulated areas.

According to the Ministry of Land, Infrastructure and Transport and the Seoul Metropolitan Government on the 23rd, the Land Transaction Permission System has been enforced in a total area of 14.4㎢ covering Jamsil, Samseong, Cheongdam, and Daechi-dong from that day. To purchase land exceeding 18㎡ in residential areas or 20㎡ in commercial areas, permission from the district mayor of the respective area is required. Apartment buildings and other multi-family housing are also subject to permission if the land share exceeds 18㎡.

However, some apartments adjacent to these areas have been excluded from the land transaction permission requirement, raising concerns about fairness and the possibility of price increases. Although they share the same Jamsil living area, apartments such as Parkrio in Jamsil 4-dong and Rose 1 and 2 Apartments in Jamsil 6-dong are excluded from the permission system because their legal dong is Sincheon-dong.

In the case of Parkrio, a 121.63㎡ (exclusive area) unit was traded for 2.033 billion KRW on the 8th, gradually regaining the price level of December last year. A representative from real estate agency A near Parkrio said, "For units around 59㎡ with jeonse (long-term deposit lease), prices are around 1.65 billion KRW," adding, "Prices have risen significantly this month."

A Ministry of Land official stated, "Since the land transaction permission zones are divided based on Songpa-daero, areas like Jamsil Els on the west side are included, while Parkrio on the east side is excluded," and added, "If overheating due to the balloon effect becomes severe in surrounding areas, additional regulatory zones will be designated."

However, even if a balloon effect occurs, it is pointed out that the government may find it difficult to present clear countermeasures. Since the land transaction permission system targets legal dongs rather than individual apartments, even if prices rise or speculative signs appear in specific apartments like Parkrio, individual apartments cannot be designated as land transaction permission zones. Designating the entire Sincheon-dong area as a permission zone could also trigger another fairness controversy.

There is also a possibility of some confusion regarding housing purchase permissions during the initial introduction of the land transaction permission system. According to the Seoul Metropolitan Government's explanation, gap investment involving the succession of existing tenants' jeonse deposits is not allowed even for a single day.

Houses can only be purchased for the purpose of direct residence, and commercial properties only for direct business use. Gap investment involving jeonse deposits is impossible, and sales or leasing are prohibited for two years. If a transaction is made without permission, penalties include imprisonment for up to two years or fines amounting to 30% of the land price, and failure to use the property as intended may result in enforcement charges.

Even if tenants currently live in the purchased house and the owner plans to move in months later, permission may be denied. This is intended to allow tenants time to move out. A Seoul official explained, "Since it is difficult to define the necessary moving time, the district office will review the contract to verify whether it is gap investment or actual residence," adding, "They may request additional documents depending on the case."

In principle, for commercial properties, if an individual purchases a building and uses even part of it directly for the intended purpose, the rest can be leased. However, it is unclear what proportion of the total purchased area must be used directly by the owner to be considered as used for the permitted purpose. A Seoul official said, "For example, if only 1㎡ out of 1000㎡ is directly managed by the purchaser, it is uncertain whether the district office will recognize it as self-management."

Meanwhile, on the first day of the land transaction permission system enforcement, real estate sales and inquiries sharply dropped at brokerage offices in Samseong, Daechi, Cheongdam-dong in Gangnam-gu, and Jamsil-dong in Songpa-gu, Seoul.

Until recently, real estate in the area had been lively due to the acceleration of the Jamsil International Exchange Complex (MICE) development project and Hyundai Motor Group's construction of the new Samsung-dong Global Business Center (GBC), but strong real estate regulations applied from this day have led to a quiet atmosphere.

[Image source=Yonhap News]