Gwangmyeong 2 District Sale Price Review at 20 Million KRW per 3.3㎡... Half Market Price Sale Sparks Opposition from Union Members

From Vermont to Gwangmyeong.

[Asia Economy Reporter Kim Min-young] The Gwangmyeong 2 District, the first redevelopment complex in Gwangmyeong New Town to be subject to the pre-sale price ceiling system, has seen its pre-sale price set at 20 million KRW per 3.3㎡, about half the market price, sparking strong opposition from the association.

According to the construction industry on the 10th, Gwangmyeong City finalized the general pre-sale price ceiling for the Gwangmyeong 2 District redevelopment complex in Gwangmyeong New Town at 20,006,112 KRW per 3.3㎡ on the 9th and notified the association. This is about 2.5 million KRW less per 3.3㎡ than the amount initially submitted by the association after land appraisal and other evaluations.

The Gwangmyeong 2 District initially planned to start general pre-sales between July and August, with construction beginning in April, but the schedule was delayed by more than three months due to disagreements between the city and the association over the pre-sale price ceiling. After difficulties between the city and the association, the first pre-sale price ceiling review committee meeting was held on the 2nd of this month.

The association applied for the pre-sale price to be as low as possible, under 23 million KRW per 3.3㎡, but the final decision of 20 million KRW has caused backlash. This is because the pre-sale price is about half the market price of nearby newly built apartments. For example, the Arc Fore Jaive in Gwangmyeong-dong, which moved in last November, has a current market price of around 1.2 billion KRW for an 84㎡ unit, and the Cheolsan Central Prugio in Cheolsan-dong, which moved in this March, is priced around 1.5 to 1.6 billion KRW. The market price per 3.3㎡ for nearby new apartments ranges from 37 million to 45 million KRW.

The Gwangmyeong 2 District association and the construction company, Daewoo Engineering & Construction, are discussing requesting a re-examination of the pre-sale price, following the government's announcement of new review standards for the pre-sale price ceiling system as of the 8th. The Ministry of Land, Infrastructure and Transport distributed a new review manual to local governments on the 8th, clearly defining the application standards for land costs and additional costs, which had varied by local government.

In a notice sent to association members the day before, the Gwangmyeong 2 District association stated, "It is regrettable that the price decided does not meet the expectations of the members," and added, "We will conduct an in-depth review of the pros and cons of re-examination by analyzing the notified pre-sale price in detail and comparing it with the government's announced amendments to the pre-sale price ceiling system." However, they also noted, "If the general pre-sale is delayed due to re-examination, additional costs such as late payment penalties, interest, and other expenses may be incurred."