Mokdong Sinsigaji with 2nd Highest Winning Bid Rate
Nearby Complex Auctioned Last Year Sees 6x Higher Competition Rate
Reflecting New Government's Expectations for Eased Reconstruction Regulations
Seoul Southern District Court Auction Courtroom
[Asia Economy Reporter Hwang Seoyul]"There is a lot of interest in complexes expected to benefit from reconstruction boons. Many reconstruction-related pledges were made during the presidential election."
This is what real estate investor A said at an auction special lecture held on the 29th of last month in Seocho-gu, Seoul. A hinted, "More people are looking for auction properties nearing the eligible reconstruction period, assuming that regulations will be eased unconditionally."
As expectations grow for President-elect Yoon Seok-yeol's pledge to ease reconstruction regulations, interest in reconstruction complexes is also rising in the auction market. Among Seoul apartments auctioned last month, Mokdong New Town Complex 11, which ranked second in bid-to-appraisal ratio, showed a competition rate six times higher than nearby complexes auctioned last year.
According to Gigi Auction on the 3rd, the 51.48㎡ exclusive area apartment in Mokdong New Town Complex 11, Sinjeong-dong, Yangcheon-gu, Seoul, attracted 18 bidders last month, recording a bid-to-appraisal ratio of 131.40%. The winning bid soared nearly 300 million KRW above the appraisal price of 932 million KRW, reaching 1.2251 billion KRW, ranking second among Seoul apartments with the highest bid-to-appraisal ratios. The number of bidders was three times the monthly average (6.67). Although Mokdong New Town Complex 11, built in October 1988, is an aging complex over 30 years old, it had been unable to proceed with reconstruction due to being blocked at the safety inspection stage in March.
However, with growing expectations that reconstruction projects will accelerate following the new government's inauguration, competition rates for aging complexes are also rising in the auction market. In fact, Mokdong New Town Complex 2 in the same neighborhood had a bid-to-appraisal ratio of 106.30% and only 3 bidders in April last year. Despite being a nearby reconstruction complex, it showed a competition rate one-sixth that of Mokdong New Town Complex 11 and a lower bid-to-appraisal ratio.
As expectations for easing reconstruction regulations increase, bid-to-appraisal ratios for highly aged complexes are also rising. If pledges such as relaxing detailed safety inspection standards and easing the reconstruction surplus profit recovery system are realized, reconstruction projects can be expected even in aging complexes, attracting more bidders. In fact, among the top 10 Seoul apartments with high bid-to-appraisal ratios, four complexes, including Mokdong New Town Complex 11, are approaching 30 years since construction. The Daea Apartment in Gayang-dong, Gangseo-gu, ranked 4th, was built in 1993, and the Sinho Apartment in Sinjeong-dong, Yangcheon-gu, ranked 5th, was built in 1997. The Sangye Shindonga in Sangye-dong, Nowon-gu, built in 1995, also attracted investors hopeful for reconstruction, resulting in a high bid-to-appraisal ratio and ranking 6th. The average bid-to-appraisal ratio of these four complexes is 117.05%, exceeding the April average of 105.10%. The average bid-to-appraisal ratio had been below 100% for two consecutive months in February (97.30%) and March (96.30%) but rebounded to over 100% last month.
Senior researcher Lee Joo-hyun of Gigi Auction said, "Interest in reconstruction complexes will grow further due to President-elect Yoon's pledge to ease reconstruction regulations," adding, "For aging complexes, even before being designated as maintenance zones, if the location is good and the floor area ratio is high, the bid-to-appraisal ratio can increase."
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