Slowest Progress in District 1: October Promotion Committee Approval, December Target for Association Establishment
Continuous Moves in Districts 5 and 3... Record High Prices Surge Mainly for Large Apartments in the Area
[Asia Economy Reporter Onyu Lim] "If we miss this year, it will become even more difficult to push forward with reconstruction." (A representative of Miseong Reconstruction Research Group in Apgujeong 1 District)
The reconstruction project in Apgujeong-dong, Gangnam-gu, Seoul, consisting of a total of 10,000 households, is gaining momentum. The newly established '2-year actual residence requirement' under the June 17 real estate measures appears to be acting as a catalyst for the project, which had been stalled due to strong reconstruction regulations such as the Reconstruction Excess Profit Recovery System.
According to the real estate industry on the 13th, the 'Miseong Reconstruction Research Group,' a residents' association of Apgujeong 1 District composed of Miseong 1st and 2nd apartments, recently held an explanatory meeting for owners and decided to push forward with reconstruction aiming to get approval for the promotion committee and apply for the establishment of the union within this year. Miseong 1st consists of 322 households, and the 2nd has 911 households. Currently, Apgujeong 1 District is the slowest in pushing reconstruction among the mid-rise old apartments concentrated in Apgujeong-dong.
The residents are rushing to establish the union due to the strengthened actual residence requirements under the government's June 17 measures. The government plans to amend the 'Act on Maintenance and Improvement of Urban Areas and Dwelling Conditions' to strengthen regulations so that reconstruction complexes that establish unions in speculative overheated districts such as Seoul after next year will only be eligible for new apartment allocation if they have actually resided for two years.
Han Hyung-gi, the head of the Sinbanpo 1st union who spoke at the explanatory meeting, said, "Many owners of Gangnam reconstruction projects are investors, so they perceive the 2-year actual residence requirement as a burden comparable to the Reconstruction Excess Profit Recovery System," adding, "Because of this, there is a very strong internal enthusiasm to apply for union establishment within this year."
The mid-rise apartments of about 10,000 households in Apgujeong-dong are divided into six district unit planning zones for reconstruction. The districts are ▲ District 1 (Miseong 1st and 2nd) ▲ District 2 (Hyundai 9th, 11th, and 12th) ▲ District 3 (Hyundai 1st to 7th, 10th, 13th, and 14th) ▲ District 4 (Hanyang 3rd, 4th, 6th, Hyundai 8th) ▲ District 5 (Hanyang 1st and 2nd) ▲ District 6 (Hanyang 5th, 7th, and 8th).
Other complexes are also moving quickly to avoid the actual residence obligation. In District 5, the owners' consent rate for union establishment is reportedly over 80%. This district received promotion committee approval in August 2018 but failed to establish the union for over two years afterward. At one point, the project was at risk of cancellation due to the sunset clause, but recently, the extension of the sunset clause has reopened the possibility of project resumption. District 3, the largest with a total of 4,065 households, is also considering applying for union establishment within this year. The consent rate has currently been raised to 65%.
As union establishment efforts continue, record-high sales transactions are occurring in apartments in this area. After union establishment approval, in principle, the transfer of union member status is not allowed except for one-house owners who have owned for more than 10 years and actually resided for more than 5 years, drastically reducing the number of available properties for sale. For example, a 160㎡ (exclusive area) unit in Hyundai 2nd was traded for 4.2 billion KRW on the 30th of last month, which is 200 million KRW higher than the previous record of 4 billion KRW in April. A 196㎡ unit in Hyundai 1st was also traded at a record high of 4.7 billion KRW on the 9th of last month despite being on a lower floor.
A representative of real estate agency A in this area said, "Consultations for purchasing Apgujeong reconstruction complexes before union establishment are rapidly increasing," adding, "Residents are unlikely to accept public reconstruction, but there is also a mood influenced by expectations for the relaxation of the 35-floor regulation."
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