[Asia Economy Reporter Choi Eun-young] As the government announced plans to promote public-led redevelopment projects in the 2·4 supply plan, the market continues to show lukewarm reactions toward 'public reconstruction,' where the public sector takes the lead. Concerns are rising that the government's project implementation plan might face setbacks as more associations choose 'private reconstruction' even if it takes more time.
According to the redevelopment industry on the 1st, various complexes undergoing association establishment procedures in Gangnam, Songpa, and Gangdong are accelerating their steps toward private reconstruction.
In particular, a new regulation that grants new apartments only to association members who have resided for two years will be implemented in June, speeding up the moves of complexes that intended to form associations earlier. The government included a mandatory clause in the June 17th measures requiring association members to have lived in the residence for more than two years to receive a new apartment. However, considering that the bill has not yet passed the National Assembly and there is a three-month grace period, applications for association establishment must be submitted by June to avoid this regulation.
Accordingly, in Apgujeong, the 4th district (Hyundai 8th, Hanyang 3rd, 4th, 6th) and the 5th district (Hanyang 1st and 2nd) have already received association establishment approval. The 2nd district (Shinhyundai 9th, 11th, 12th) and the 3rd district (Hyundai 1st to 7th, 10th, 13th, 14th, Daerim Villate) held association establishment general meetings on the 25th and 28th of last month, respectively, and are proceeding with approval procedures.
On the 18th of last month, the Samik Garden (768 households) promotion committee in Myeongil-dong, Gangdong-gu, completed its association establishment application, and Cheonho Woosung (479 households) in Cheonho-dong also completed its association establishment approval application in January, thus avoiding the two-year residency obligation. In Songpa-gu, Garak Miryung (435 households) in Garak-dong submitted its association establishment approval application on the 16th of last month.
As redevelopment promotion committees speed up association establishment, prices in these complexes are also rising. The exclusive area 182.95㎡ unit in Shinhyundai 12th, part of Apgujeong 2nd district, rose from the highest sale price of 4.5 billion KRW last year to 5.75 billion KRW on January 16th, an increase of over 1.4 billion KRW, and the asking price for an 82㎡ unit in Samik Garden, Myeongil-dong, recently rose from 1.3 billion KRW to 1.5 billion KRW, according to Korea Economic Daily.
However, whether they will choose public reconstruction or public-led redevelopment projects remains uncertain. Not only is there no redevelopment complex in the Gangnam area currently pushing for public reconstruction, but there is also a perception that "the business feasibility is low," so there is no compelling reason to consider it.
One of the reasons for avoidance is that ownership must be transferred to the public in the case of public reconstruction. The government plans to announce the first candidates for public direct implementation redevelopment projects in July, emphasizing the advantage of rapid progress, but major redevelopment complexes still show reluctant responses, raising doubts about the effectiveness of the plan.
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