Despite Consecutive Failures, Prices Hold Firm... Stubborn Gangnam Reserved Land

On the 31st, customers visiting the model house of Seocho Woosung 1st Reconstruction Apartment 'Raemian Leaders One,' which opened at Raemian Gallery in Songpa-gu, Seoul, were examining the complex model. Raemian Leaders One is a complex being built with 12 buildings, 1,317 households (232 for general sale), ranging from 3 basement floors to 35 above-ground floors. The average sale price per 3.3㎡ is 44.89 million KRW. Photo by Hyunmin Kim kimhyun81@

[Asia Economy Reporter Kim Hyemin] As a cold wave hits the real estate sales market, transactions of apartments in the Gangnam area are declining, but the prices of reserved units offered by the associations remain stubbornly high. Despite several failed auctions, the associations have not lowered prices and continue to engage in a tug-of-war with market prices.

According to industry sources on the 10th, the Seocho Woosung 1st Reconstruction Association in Seocho-gu, Seoul, recently announced the sale of two reserved units (exclusive area 113㎡) at Raemian Leaders One. These units have been put up for sale four times but failed to find buyers. However, the association maintained the minimum bid price at 3.8 billion KRW.

Reserved units are quantities that the association keeps without offering to the general public to prepare for unforeseen future situations. Anyone aged 19 or older or corporations can participate without a subscription savings account. However, there are burdens such as not being able to receive interim payments or mortgage loans, and the full payment must be made within six months after winning the bid.

The Seocho Woosung 1st Reconstruction Association initially reserved nine units as reserved units and began the sales process in February last year. The initial sale price for the remaining 113㎡ units was 3.2 billion KRW. Subsequently, the association raised the price to 3.3 billion KRW, then 3.5 billion KRW, and despite the real estate market downturn earlier this year, it increased to 3.8 billion KRW in May.

The association explained that the price reflects the market price. According to the Ministry of Land, Infrastructure and Transport’s actual transaction prices, the same-sized apartment was traded for 4.05 billion KRW in June this year. However, the reserved units are on the 4th floor, while the actual transaction was on the 20th floor. A similar floor (6th floor) was sold for 3.65 billion KRW in September last year.

This time, the association maintained the existing 3.8 billion KRW price, which contrasts with the recent trend of lowering reserved unit prices. In Taereung Harrington Place in Gongneung-dong, Nowon-gu, where reserved unit sales were unpopular, the bid prices for all units were lowered in the seventh sale. The 59㎡ units dropped from 930 million KRW to 900 million KRW, and the 74㎡ units fell from 1.1 billion KRW to 1.06 billion KRW. Similarly, 'DMC SK View I-Park Foret,' redeveloped from Susaek 13 District in Eunpyeong-gu, lowered prices below market value in last month’s bidding, successfully selling 21 out of 22 units, and completed the sale of the last unit through bidding the day before.

An industry insider said, "In the Gangnam area, there are no unsold units, so even if sales are delayed, it does not affect the association, and there is a perception that demand exists at any time. Associations seem to be in no hurry, conscious that lowering prices below market value could lead to dissatisfaction among existing association members. However, since reserved units require immediate full payment, it will be difficult to find buyers, especially during times of housing price contraction like now."