[Exclusive] Disappeared Capital Gains? 'The H Jae Gaepo' Sold for 1.5 Billion Won... Halved in Value in Just One Year

DH Jaigaepo Rendering [Provided by Hyundai Engineering & Construction]

[Asia Economy Reporter Noh Kyung-jo] The 'The H Jaei Gaepo,' which was occupied last July, was recently sold at the original sale price level of 1.5 billion KRW. This represents a drop of 1.5 billion KRW in just one year. This apartment was once described with terms like '15 billion KRW capital gain' and 'lottery sale' at the time of its initial offering.

According to the Ministry of Land, Infrastructure and Transport's real transaction price disclosure system on the 7th, an 84㎡ unit of The H Jaei Gaepo in Irwon-dong, Gangnam-gu, Seoul, was directly traded for 1.5 billion KRW on the 25th of last month. This is the first time a transaction in the 1 billion KRW range has occurred since the sale right was traded for 1.72117 billion KRW in February 2019.

The price is about 500 million KRW lower than the direct transaction price of 2.08273 billion KRW in January this year. Compared to last year, the decline is even greater. The 84㎡ unit was directly traded for 2.9 billion KRW in November last year. The sale price involving a licensed real estate agent was 2.95 billion KRW. The highest price (excluding sale rights) was 2.99 billion KRW, traded in August last year. This marks a drop of about 1.5 billion KRW in about a year.

Recently, amid loan regulations and successive interest rate hikes, the downward trend in housing prices has become clear, with complexes dropping by hundreds of millions of KRW. However, in the case of this The H Jaei Gaepo sale, the price formed is similar to the original sale price in numerical terms, effectively eliminating the capital gain itself.

The H Jaei Gaepo is a reconstruction apartment to which Hyundai Construction applied its high-end brand 'The H.' GS Construction and Hyundai Engineering also share stakes, but Hyundai Construction was the main contractor. The 84㎡ units were sold in 2018 at around 1.4 billion KRW, and thereafter, with expectations of capital gains, the pre-move-in sale rights exceeded 3 billion KRW.

Also, when five canceled contract units were released for non-priority subscription in August last year, a staggering 250,000 people rushed to participate in the 'jupjup' (picking up) event. Specifically, 120,400 people applied for one 84㎡ unit, and 128,583 people applied for four 118㎡ units.

Officials from local licensed real estate offices expect that this sale was conducted under a transaction freeze situation and was a direct transaction, suggesting it may have been for a special purpose or form. They explained that similar units in the same complex are priced around 2.9 billion KRW, and nearby Raemian Gaepo Luceheim units are listed at 2.6 billion KRW.

A representative from a licensed real estate office in Irwon-dong said, "The rental price of The H Jaei Gaepo exceeds 1.5 billion KRW, so the sale price cannot be this low," adding, "Since it was a direct transaction, we cannot know for sure, but we speculate it might be a kind of equity transaction."