Yongsan Heating Up... 70 People Flock to Old Villa Auction, Price Soars to 470 Million Won

[Asia Economy Reporter Ryu Tae-min] The Yongsan area, where the presidential office will be located, is attracting significant attention in the auction market as well. This is due to rising development expectations following the announcement that no additional regulations will be imposed after the office relocation. Cases have even emerged where dozens of bidders flocked to auctions of old villas over 30 years old, driving prices up by more than 400 million KRW.

According to Gigi Auction, a court auction specialist company, on the 29th of last month at the Seoul Western District Court, a villa located in Cheongpa-dong, Yongsan-gu, with an area of 55.1㎡ on the basement first floor, appraised at 250 million KRW, was sold for about three times the appraisal price at 720 million KRW. Although this property, built 32 years ago, has a senior tenant with a deposit of 80 million KRW secured, as a right-holder, as many as 70 bidders participated.

The high auction price appears to be driven by redevelopment expectations. In fact, the Cheongpa 2 District area where the property is located was selected as the first candidate site for Seoul City's Rapid Integrated Planning (Shintong Planning), raising hopes that redevelopment will accelerate. Shintong Planning is a project where private-led development is promoted and the public sector supports planning and procedures. Typically, the designation process for maintenance districts, which used to take about five years, is reduced to two years. Cheongpa 2 District is a large-scale residential development area with an area of approximately 83,788㎡ and more than 1,500 landowners; a New Town project was canceled there in 2008.

Additionally, the abolition of the 'Residential Maintenance Index System,' which was considered an obstacle to redevelopment, is expected to help speed up maintenance projects. Previously, even if the legal district designation requirements were met, projects were difficult to proceed if the residential maintenance index score was below 70 points or the aging rate was less than 60% of the total floor area.

Another factor behind the high auction prices is that the area is designated as a land transaction permission zone. When buying houses in such zones, permission from the district office is required. However, unlike general sales, acquiring real estate through auction is exempt from obtaining separate local government transaction permission under the exceptions of the Civil Procedure Act. Also, acquiring property via auction does not trigger the obligation for actual residence since transaction permission is not required. Consequently, bidders are also attracted because the obligation to submit a separate funding plan is waived.

Experts believe that development projects in the area, which had been stagnant due to the presidential office relocation, will gain momentum. In particular, President-elect Yoon Seok-yeol has firmly stated that there will be no additional regulations such as floor height restrictions, which residents were most concerned about, alleviating anxieties. Lee Joo-hyun, a senior researcher at Gigi Auction, explained, "As the real estate market in the Yongsan area has surged recently due to the presidential office relocation, investors have shown great interest. The property in question also has a large land share, and the appraisal was conducted three years ago in 2019, so the appraisal price was perceived as low, which seems to have influenced the bidding."