Next Year's Sale Plan Aligned with Official Land Prices
Disagreement Remains on Pre- or Post-Sale Options
[Asia Economy Reporter Choi Dong-hyun] The redevelopment project of Dunchon-dong Jugong Apartments in Gangdong-gu, Seoul, involving a total of 12,032 households, has overcome a major hurdle as internal lawsuits that lasted for about 100 days have been settled. Residents plan to set the sale price according to next year's official land price to raise the price, but there are still many disagreements among residents over whether to sell before or after construction, so the project process is expected to be far from smooth.
According to the industry on the 26th, the Seoul Eastern District Court recently approved the provisional injunction to suspend the duties of the existing Dunchon Jugong union president and executives, while dismissing their request to suspend the effectiveness of the temporary general meeting. The court judged that the temporary general meeting held on August 8 to dismiss the existing union president was lawful. For the time being, Dunchon Jugong will be maintained under the supervision of the court with a duty agent system without forming an executive body. Candidate recommendations will be accepted until the end of this month, and the appointment is expected to be completed around mid-December.
Since the sale within the year is practically off the table and the price ceiling system cannot be avoided, union members are considering a plan to proceed with general sales after the official land price for next year is announced. This is because if the official land price rises, the land cost increases, allowing the general sale price to be raised accordingly. Under the price ceiling system, the sale price is calculated by adding the land cost and construction cost (basic construction cost + architectural additional cost), with the land cost accounting for 60-70% of the sale price. The government also announced a roadmap to raise the standard land official price by 3 percentage points annually to reach 90% of the market price by 2028.
There is also an analysis that even if the official land price rises somewhat, the desired sale price of 35 million KRW per 3.3㎡ by the union members is difficult to achieve. Previously, Dunchon Jugong was notified by the Housing and Urban Guarantee Corporation (HUG) of a sale price of 29.7 million KRW per 3.3㎡. In the case of Artes Misozium in Godeok-dong, Gangdong-gu, which recently applied the price ceiling system, union members initially wanted a sale price in the 28 million KRW range per 3.3㎡, but the Gangdong-gu Sale Price Deliberation Committee finally decided on a price 8.25% lower at 25.69 million KRW.
If the sale price falls short of the desired level, voices calling for switching to post-sale remain high. A representative of the 'Dunchon Jugong Union Members' Group,' which led the dismissal of the former union president, said, "Recently, union members have been demanding the construction company to implement measures to prevent noise between floors and improve elevators," adding, "If these issues, as well as the sale price, are not resolved, the schedule will inevitably be delayed."
However, since the project cost alone reaches 3 trillion KRW, the increase in financial costs due to project delays is a burden on union members. An industry official said, "Since there is no project promotion entity for Dunchon Jugong yet, the construction team is observing, but once the official executive body is formed early next year, full-scale negotiations on major issues will be possible."
© The Asia Business Daily(www.asiae.co.kr). All rights reserved.
