[Asia Economy Reporter Song Seung-yoon] Hwacheon Daeyu Asset Management (Hwacheon Daeyu), embroiled in allegations of preferential treatment in the Daejang-dong development project in Seongnam-si, Gyeonggi-do, is expected to earn sales profit from pre-sale amounting to around 400 billion KRW.
The urban lifestyle housing 'Pangyo SK View Terrace' developed by Hwacheon Daeyu on the townhouse site (B1 block) recorded an average competition rate of 316.8 to 1, with 92,491 applications received for 292 units as of the subscription deadline on the 17th of this month. The sale price was set at 34.4 million KRW per 3.3㎡, similar to the prices of nearby apartments. The down payment is split into two installments: the first installment is 10%, and the second installment, also 10%, is due within 30 days after the contract. Move-in is scheduled for August 2023.
In the real estate industry, the cost of land acquisition and construction for Pangyo SK View Terrace is estimated to be around 20 million KRW per 3.3㎡, leading to an estimated pre-sale profit of approximately 150 billion KRW.
Previously, Hwacheon Daeyu agreed with 'Seongnam's Garden' to directly implement five blocks out of the 15 blocks in Daejang-dong (12 apartment blocks and 3 townhouse blocks), including one townhouse block (Pangyo SK View Terrace) and four apartment blocks. Seongnam's Garden is a special purpose corporation for the Daejang-dong development, involving Hwacheon Daeyu as the asset management company, Seongnam Urban Development Corporation, and financial institutions.
According to Hwacheon Daeyu's audit report, the pre-sale profit was 153 billion KRW last year and 82.2 billion KRW in 2019, totaling 235.2 billion KRW. This profit was earned from directly implementing apartment projects on four apartment sites.
The apartments began move-in this May, and Hwacheon Daeyu's additional estimated pre-sale profit for this year is in the 70 billion KRW range. Accordingly, Hwacheon Daeyu is predicted to earn a total pre-sale profit of about 450 billion KRW from the five apartment and townhouse projects it is implementing in Daejang-dong.
Hwacheon Daeyu has faced allegations of preferential treatment for receiving dividends amounting to 1,154 times its investment by participating in the Daejang-dong public development project promoted by Lee Jae-myung, a leading presidential candidate from the Democratic Party of Korea, during his tenure as mayor of Seongnam.
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