[Real Estate Investment] 110,000 Households Offered in Q1... Notable Gems to Watch

Largest Scale Expected in Q1 Since 2002
3.5 Times the Sales of the Same Period Last Year
Impact of Delayed Large-Scale Sales Due to COVID-19
65,000 Units in the Seoul Metropolitan Area Including 42,377 in Gyeonggi

[Asia Economy Reporter Onyu Lim] In the first quarter, 110,000 new housing units will be released nationwide in the pre-sale market. Although the first quarter is generally considered an off-season for the pre-sale market, this year the atmosphere is quite different. Due to the resurgence of COVID-19 last year, some complexes postponed their pre-sales, but as they begin pre-sales early this year, the supply volume in the first quarter is expected to be the largest since 2002. Experts advise that real demand buyers aiming to purchase their own homes should actively apply for subscriptions, as many prime complexes in the Gangnam area of Seoul are included.

According to Real Estate 114, the planned supply of private apartment pre-sales nationwide in the first quarter of this year amounts to 112 complexes totaling 113,429 units (including rental units, based on total households). This is 3.5 times the volume of 32,685 units sold in the same period last year, which was sluggish due to the transfer of subscription work and the impact of COVID-19. Compared to the fourth quarter of last year’s pre-sale performance (80,927 units), it is also more than 30,000 units higher. Ye Kyung-hee, senior researcher at Real Estate 114, said, "If pre-sales proceed as planned, it will be the highest first-quarter performance since 2002."

◇ 65,000 units to be released in the metropolitan area = Monthly supply volumes are △39,971 units in February △33,917 units in March, averaging over 30,000 units per month. The increase in first-quarter volume is partly due to the rescheduling of large complex pre-sale schedules originally planned for the end of last year. Among the 74,896 units in 40 complexes with over 1,000 units scheduled for pre-sale in the first quarter, 15 complexes with 30,686 units had their pre-sale schedules postponed. A representative example is ‘Raemian One Bailey’ in Banpo-dong, Seocho-gu, Seoul. This complex, originally planned for pre-sale at the end of last year, recently finalized its general pre-sale price and is expected to release units to the market as early as this month.

Looking at the first-quarter volume by city and province, the metropolitan area will see a total of 64,760 units released: △Seoul 3,953 units △Gyeonggi 42,377 units △Incheon 18,430 units. In the provinces, 48,669 units will be supplied: △Gyeongnam 11,143 units △Daegu 8,437 units △Chungbuk 5,718 units △Busan 4,976 units.

◇ Large complexes stand out in Gyeonggi area = In the metropolitan area, a large volume of units will be released in Gyeonggi Province. Particularly, large-scale pre-sale complexes are notable. The most eye-catching is the Gwangmyeong 2R district redevelopment in Gwangmyeong-dong, Gwangmyeong. It is a mammoth complex with a total of 3,344 units, and housing prices in the area are rapidly rising, so many applicants are expected to flock. Other large complexes with good locations include Suwon’s Gwonseon 6 district (2,175 units) and Hillstate Yongin Dunjeon Station in Gorim-dong, Yongin (1,721 units). Researcher Ye said, "Subscription demand will continue for relatively large complexes with well-established communities and infrastructure," adding, "We expect strong pre-sale performance in areas with well-developed metropolitan transportation networks such as Seongnam, Suwon, and Gwangmyeong."

◇ Competition rates expected to soar in prime Gangnam area = In Seoul, a total of 3,458 private apartment units excluding rentals are scheduled for pre-sale. This is more than 2,000 units compared to the previous quarter (1,130 units). Especially, complexes near pre-sale in the Gangnam area are concentrated, and winning a subscription is expected to yield several hundred million won in price differences. Besides Raemian One Bailey (2,990 units) in Banpo-dong, Seocho-gu, other notable complexes include the KT site in Banpo-dong, Seocho-gu (140 units) and Songpa Ogeum Anam in Ogeum-dong, Songpa-gu (328 units). In the Gangbuk area, Jayang Haneulchae Verre (165 units) in Jayang-dong, Gwangjin-gu will open subscriptions in the first quarter.

In Incheon, supply will continue in areas where subscription competition was fierce last year, such as Yeonsu, Bupyeong, and Seo-gu. Upcoming pre-sales include e-Pyeonhansesang Bupyeong Granghills in Cheongcheon-dong, Bupyeong-gu (5,050 units), Songdo Jaik Crystal Ocean in Songdo-dong, Yeonsu-gu (1,503 units), and Geomdan New Town Woomeerin in Dangha-dong, Seo-gu (1,180 units).

◇ Provincial pre-sales, a bountiful year in Yeongnam = In the provinces, pre-sale volumes are concentrated in the Yeongnam region. By city and province, Gyeongnam has the largest volume with 11,143 units. Notable complexes include Kimhae Yulha Doosan We’ve in Sinmun-dong, Kimhae (4,393 units), Changwon Gyobang 1 district (1,538 units), and Geoje Sangdong The Sharp in Sangdong-dong, Geoje (1,288 units).

In Daegu, a total of 8,437 units will be pre-sold, including Suseong The Palace Prugio The Sharp in Padong, Suseong-gu (1,299 units) and Hanyang Sujain The Palcity in Songhyeon-dong, Dalseo-gu (1,021 units). In Busan, Raemian Forestage in Oncheon-dong, Dongnae-gu (4,043 units) is expected to attract many applicants.

◇ "House prices will rise again" Subscription fever continues this year = Experts expect the subscription fever from last year to continue in the early pre-sale market this year. The number of unsold units, which was 43,268 units as of January last year, dropped significantly to 19,005 units by the end of December, and the number of subscription account holders nationwide has exceeded 27 million, indicating growing preference for new apartments.

Researcher Ye said, "However, since pre-subscriptions for the 3rd New Town and other metropolitan areas will begin in July, some demand dispersion effects are expected," adding, "In the provinces, Ulsan and Sejong, where supply volumes are low, are expected to perform well, and subscription demand may flow into some areas where resale is allowed."

Meanwhile, starting from the 19th, winning a pre-sale apartment under the price ceiling system will require a minimum residence obligation of at least two years. In public land, depending on the pre-sale price, the mandatory residence period is 3 to 5 years from the initial move-in date, and in private land, it is 2 to 3 years. If the residence obligation period is not fulfilled, penalties include imprisonment of up to one year or fines of up to 10 million won. However, unavoidable circumstances such as overseas stays, work, livelihood, schooling, or medical treatment in other regions during the residence obligation period can be recognized as residence in the relevant housing if confirmed by the Korea Land and Housing Corporation (LH).