Successive Cooperative Establishments... The Struggle of Prime Reconstruction to Avoid the '2-Year Actual Residence' Requirement

Establishment of Cooperatives for Gwacheon Jugong Complexes 8 and 9 Following Apgujeong Districts 4 and 5
2-Year Residency Regulation Announced in the 6·17 Measures Acts as a Catalyst
Housing Prices Accelerate Amid Reconstruction Rush... "Apgujeong Prices Are Skyrocketing"

[Image source=Yonhap News]

[Asia Economy Reporter Onyu Lim] Prime reconstruction complexes in the Seoul metropolitan area are making every effort to avoid being hindered by the '2-year residency requirement.' As a result, following the long-stalled Apgujeong-dong 5 District (Hanyang 1st and 2nd phases) in Gangnam-gu, Seoul, even the Gwachon Burim-dong Jugong 8th and 9th complexes, which received approval for the promotion committee less than a year ago, have obtained approval for the establishment of reconstruction associations.

According to the maintenance industry on the 27th, the Apgujeong District Special Plan 5th District received approval for the establishment of a reconstruction association from Gangnam-gu Office on the 22nd. This came 3 years and 5 months after the reconstruction promotion committee was established in August 2017. With this, the 5th District became the second among the six maintenance districts in Apgujeong to successfully establish an association, following the 4th District (Hyundai 8th phase, Hanyang 3rd, 4th, and 6th phases).

Composed of Hanyang 1st and 2nd phases, Apgujeong 5th District consists of a total of 15 buildings and 1,232 households. It is scheduled to be reconstructed through project implementation approval and management disposition plans.

On the following day, the 23rd, the Gwachon Jugong 8th and 9th complexes received approval for the establishment of a reconstruction maintenance project association from Gwachon City. This was just 9 months after receiving promotion committee approval in May last year. With a total of 2,120 households (1,400 in the 8th complex and 720 in the 9th complex), this complex is planned to be reconstructed into up to 35 floors with 3,311 households through project implementation approval and management disposition plans.

Although the speed from the promotion committee to the association differed, the driving force behind the successful establishment of associations in Apgujeong 5th District and Gwachon Jugong 8th and 9th complexes was similar: the strengthened residency requirements following the June 17, 2020 measures.

The government stipulated that reconstruction association members in speculative overheated districts must have resided for 2 years to qualify for new apartment allocations. However, projects that completed their association establishment applications before the amendment of the Urban and Residential Environment Maintenance Act could avoid this regulation, sparking a speed race among reconstruction projects. The bill is still pending in the National Assembly.

A representative of the Gwachon Jugong 8th and 9th complexes said, "After the June 17 measures, inquiries about the 2-year residency requirement surged," adding, "Subsequently, the submission of consent forms by owners in the 9th complex, where the consent rate was relatively low, continued, enabling the establishment of the association."

A representative from a real estate agency in Apgujeong-dong said, "The largest 3rd District (Hyundai 1st to 7th, 10th, 13th, 14th phases, Daerim Villart) and 2nd District (Hyundai 9th, 11th, 12th phases) are also planning to hold general meetings for association establishment within February, so they are expected to avoid the 2-year residency regulation."

As reconstruction projects accelerate, housing prices are also rising sharply. The Shinhyundai 12th phase 182㎡ (exclusive area) in Apgujeong-dong changed hands last month at a record price of 5.75 billion KRW, up 1.4 billion KRW from the actual transaction price of 4.35 billion KRW a month earlier. The Hyundai 6th and 7th phases 156㎡ were traded at 4.1 billion KRW last month, but the asking price jumped to 5 billion KRW. The actual transaction price of the Gwachon Jugong 8th complex 73㎡ also rose from a peak of 1.32 billion KRW in January last year to a peak of 1.48 billion KRW in January this year. The asking price for available units far exceeded the loan restriction line, rising to 1.55 billion KRW.