80% Additional Non-Preference Subscription for Solo Apartment Complexes in Seoul

High Subscription Competition Rate Seemed Like a Hit...Mass Uncontracted Units
Low Expectation of Value Increase Due to Prices Higher Than Surrounding Market

[Asia Economy Reporter Kim Hyemin] Due to soaring housing prices and supply shortages, it has been confirmed that most of the single-building apartments in Seoul, which recorded high competition rates at the time of subscription, have launched additional subscription rounds. While these apartments were popular during the initial subscription due to indiscriminate applications, they ended up facing a mass non-contract situation during the actual contract phase.

According to the Korea Real Estate Board's Subscription Home on the 18th, the Sillim Sky Apartment in Gwanak-gu will accept non-priority subscriptions starting from the 20th. This comes about a month after conducting a non-priority subscription, also known as 'Jupjup', last month.

At the first priority subscription in August, this apartment attracted 994 applicants for 43 units, recording an average competition rate of 23 to 1. The largest unit size among the supply, 56㎡ (exclusive area), saw a competition rate as high as 246 to 1. It was considered unusual that a single-building apartment composed only of small units in a non-subway area was fully subscribed in all unit sizes during the first priority subscription.

However, the contract results for the winners were quite different. Many winners gave up their contracts, leading to accumulated uncontracted units, and eventually, an additional subscription was held on the 14th of last month for 27 units. Although 989 applicants participated in the additional subscription, with an average competition rate of 36.6 to 1, only 5 units were ultimately contracted.

The situation is similar even when expanded to small-scale complexes supplied in Seoul this year. Among the 12 apartment complexes supplied in Seoul this year, 9 are single-building complexes with around 100 units. All of these complexes recorded double-digit high competition rates during the first priority subscription. However, 7 of these complexes had remaining units after the official contracts, leading to non-priority subscriptions. Among these, 3 complexes including Sillim Sky failed to fill residents even through non-priority subscriptions and had to conduct another round of related subscriptions.

The fact that many first-priority winners gave up their contracts despite the disadvantage of a 10-year re-subscription restriction seems to be because the sale prices of many apartments were higher than the surrounding market prices, and the small scale of the complexes lowered expectations for value appreciation.

In fact, in the case of Sillim Sky, the sale price for the 56㎡ unit is 599 million KRW, which is similar to or even higher than nearby apartments, according to local real estate agencies. Similarly, in Gangseo-gu, the Ujangsan Hanul H Valleyum was priced between 740 million and 780 million KRW, but the market price of nearby single-building complexes was found to be below this price.

The fact that most single-building apartments are designed as small units also seems to have had an impact. The Avenue Cheonggye I in Dongdaemun-gu, which conducted non-priority subscriptions twice, consists of units ranging from 16 to 27㎡, which are practically close to studio apartments. Seun Prugio Heritage, which conducted non-priority subscriptions for 68 out of 281 units in June, also consists of units sized 24 to 29㎡. Sillim Sky is composed of units ranging from 35 to 56㎡ exclusive area.

An industry insider said, "Many winners probably applied impulsively under the 'Seondang Hugom' (worry after winning) atmosphere but hesitated after winning. Single-building apartments lack infrastructure compared to large complexes and it is difficult to expect significant price gains, so they tend to be overlooked."