Heukseok 2 Sale Price 1.3 Billion Won...Public Redevelopment Candidate Site "Expecting Rapid Project Progress"

Exemption from Price Ceiling on Pre-sale as Incentive and HUG High-priced Sale Review
Pre-sale Prices Calculated Reflecting Up to 85% of Market Prices Around Speculative Overheated Zones
Prime Project Sites like Singil, Seongbuk, Jangwi May Reach 900 Million to 1 Billion KRW Range
However, Concerns Over Increased Burden on Non-homeowner Applicants Due to High Pre-sale Prices

[Image source=Yonhap News]

[Asia Economy Reporter Onyu Lim] As the expected sale price for the 84㎡ (exclusive area) unit in Heukseok 2 District, the first public redevelopment candidate site in Dongjak-gu, Seoul, exceeds 1.3 billion KRW, expectations are rising for the other candidate sites as well. The sale prices for the same area in prime candidate sites such as Singil 1 District in Yeongdeungpo-gu and Seongbuk 1 District in Seongbuk-gu are also expected to reach the 1 billion KRW range. However, there are concerns that public redevelopment aimed at stabilizing the real estate market could instead stimulate housing price increases and increase the burden on non-homeowner applicants.

According to the maintenance industry on the 21st, Seoul Housing and Communities Corporation (SH) recently held a residents' briefing session in Heukseok 2 District and announced that the general sale price is expected to be between 39.42 million and 42.24 million KRW per 3.3㎡. Compared to the average sale price of 28.13 million KRW in Heukseok 3 District (Heukseok River Park), which was sold last year, this is up to 50% higher. It is also about 70% of the actual transaction price of 2 billion KRW in Heukseok 7 District (Acro River Heim) in March.

The reason the expected sale price in Heukseok 2 District is so high is due to the incentives applied in public redevelopment. This is the result of applying the high sale price review standards of the Housing and Urban Guarantee Corporation (HUG), rather than the sale price ceiling system. In fact, with the recent changes in HUG's high sale price review standards, the sale prices of apartments in speculative overheated districts such as Seoul have risen to as much as 85% of market prices.

When the general sale price rises, profits increase accordingly, and the additional burden on union members relatively decreases. In other words, this means that project promotion can proceed more smoothly. Accordingly, expectations are also rising for the public redevelopment candidate sites currently preparing for residents' briefing sessions.

Among the second round of public redevelopment candidate sites, prime areas with nearby apartment market prices ranging from 1.3 billion to 1.5 billion KRW are concentrated. Calculating with a simple market price reflection rate of 70%, Singil 1 District can expect a sale price in the 900 million to 1 billion KRW range. This is because the sale rights for Singil 3 District (The Sharp Park Prestige) nearby are listed at around 1.4 billion KRW. Seongbuk 1 District is also expected to have a sale price in the 1 billion KRW range. Recently, the nearby Raemian Centerpiece (Gireum 2 District) was traded at 1.475 billion KRW. The industry also expects that Jangwi 8 and 9 Districts could have sale prices exceeding 900 million KRW. If market prices rise further by the time of sale, even higher sale prices could be set.

A representative of a second-round public redevelopment candidate site, who requested anonymity, said, "With the recent inauguration of Seoul Mayor Oh Se-hoon, expectations for redevelopment regulation easing have increased, and it is true that opposition voices had grown," adding, "If a high sale price is received, it will ease conflicts among residents and make project promotion smoother."

However, there are also criticisms that public redevelopment, which aims to stabilize the real estate market through supply expansion, paradoxically raises sale prices and stimulates housing prices. Additionally, since mid-term loans are not available for sale prices exceeding 900 million KRW, there are concerns that general sales through public redevelopment could become a 'party for cash-rich buyers.'