Suspected Irregularities in Suncheon-si Jorye Daegwang Apartment Sales... 66 Million KRW Difference in 9 Months

Transparency Needed in Supplying 35 Company-Owned Units...Call for Comprehensive Investigation Raised

[Asia Economy Honam Reporting Headquarters Reporter Kim Chunsu] There are growing suspicions that Mr. A, a reporter from a certain media company, made tens of millions of won in capital gains by purchasing apartments during the process of disposing of 35 unsold units owned by the company at Daekwang Rojeviang Bonghwasan Apartments in Jorye-dong, Suncheon-si, Jeollanam-do, in 2018.

In 2016, reports emerged through the media about complaints from residents of nearby apartments suffering from noise and vibrations during the construction of Daekwang Rojeviang Bonghwasan Apartments (hereinafter Jorye Daekwang) in the Jorye-dong area of Suncheon-si, Jeollanam-do.

According to officials from the Jorye Daekwang construction company at the time, the project faced several construction suspension orders due to residents’ complaints delivered through media reports and directly to the city hall, but after many difficulties, the construction was finally completed.

During this process, the media company, represented by Mr. A, also reported on the noise and vibration issues at the construction site.

Subsequently, on December 13, 2018, Mr. A signed a sales (purchase) contract with the developer and transferred ownership on April 5, 2019.

He then resold the apartment on December 24 of the same year and transferred ownership to a new buyer on January 22.

The price Mr. A paid to the developer was 191.5 million won, and after holding the property for about nine months from the ownership transfer date, he sold it for 257.5 million won, making a difference of 66 million won.

This outcome was predictable since a premium of tens of millions of won had already been formed on the apartment at the time Mr. A signed the sales contract with the developer.

Real estate expert Mr. B said, “It seems the transaction took place with both parties aware that a premium existed,” adding, “No one would buy expecting the apartment price to fall.”

In response, Mr. A explained, “I intended to live there with my mother,” and said, “Another journalist, Mr. C, introduced me to the developer so that I could purchase the apartment.”

The issue lies in the fact that Mr. A, who reported on the complaints about the apartment, purchased the apartment from the developer who had experienced difficulties in the project due to those reports.

In other words, he caused trouble through media reports but received the apartment at the original sale price despite the premium being worth tens of millions of won.

Moreover, another journalist, Mr. C, is involved between them, raising suspicions of a special relationship transaction, and the controversy over the Jorye Daekwang apartment sales rights is expected to spread further.

Between October 2018 and February 2019, when Mr. A purchased the apartment, there were a total of 86 transactions of Jorye Daekwang apartments: 35 were company-owned units (supply contracts), and 51 were general sales rights transactions.

Among the 51 general sales rights transactions, premiums of up to 32 million won were reported in actual transaction reports, but the company-owned units were transacted at the supply contract price without premiums.

Accordingly, there are claims in some quarters that the 35 transactions of company-owned units received were profiteering through preferential treatment.

Considering the previous practice of underreporting premiums and that this was the last apartment in Suncheon priced in the 6 million won range, there is speculation that the actual premiums might have been higher.

The current Improper Solicitation and Graft Act extends its scope to media companies and sets the provision of money or benefits exceeding 1 million won per instance as the standard, regardless of whether there is a quid pro quo.

The seriousness of real estate speculation issues across society is such that President Moon Jae-in said in a special speech on the 4th anniversary of his inauguration at the Blue House Press Hall on the 10th, “Housing stability is the core of people’s livelihood,” and “Real estate corruption must be eradicated,” as well as “We will thoroughly block real estate speculation to improve asset inequality.”

A city official said, “Since administrative agencies do not have investigative authority over real estate corruption issues, there are limits to investigations,” adding, “The prosecution, police, or tax authorities will be able to handle it in depth.”

Meanwhile, despite citizens’ calls for a full investigation into the transactions of company-owned units at Jorye Daekwang Apartments, Suncheon City has taken no action, showing a stark contrast to nearby Yeosu City, which has launched a comprehensive real estate speculation investigation.