Riverside Complexes Still Rise... Banpo Jugong 1 Complex Sold for 7.3 Billion Won

Two Transactions Around 7 Billion KRW in Banpo Jugong 1 Complex in September
Price Decline Yet Riverside Complexes Expected to Rise
Reconstruction Feature Also Played a Major Role
Record High Prices Persist for Riverside Complexes Regardless of Autonomous District

Real estate stock photo / Photo by Mun Ho-nam munonam@

[Asia Economy Reporter Hwang Seoyul] Regardless of interest rate hikes and loan regulations, high-priced riverside homes along the Han River that only ‘cash-rich’ buyers can afford continue to set new record prices. In Banpo Jugong 1st Complex, two units sold last month were both priced above 7 billion KRW.

According to the Ministry of Land, Infrastructure and Transport’s Real Transaction Price Disclosure System on the 3rd, a unit in Banpo Jugong 1st Complex (140.13㎡) in Banpo-dong, Seocho-gu, Seoul, was sold for 7.3 billion KRW on the 6th of last month. On the 3rd of the same month, another unit sold for 7.15 billion KRW, setting a new record price, which is 150 million KRW higher than the previous record. The previous record price was 6.9 billion KRW, recorded in May.

‘Cash-rich’ buyers, unaffected by loan regulations and interest rate hikes, seem to continue purchasing at record prices, anticipating the potential rise of riverside complexes despite the overall downward trend. Currently, Seoul, designated as a speculative overheated district, does not apply LTV (Loan-to-Value ratio) restrictions on apartments priced over 1.5 billion KRW, so purchasing a unit priced over 7 billion KRW requires a significant amount of cash.

Moreover, the fact that Banpo Jugong 1st Complex is a reconstruction complex appears to have played a major role. Built in 1973, this complex has completed resident relocation and is awaiting demolition. Since construction has not started for over three years after the project approval in 2017, owners who have held their units for more than three years can transfer their reconstruction association membership rights before construction begins. The government’s recent rationalization plan for the reconstruction excess profit recovery system also reduces the burden on the association, potentially driving prices even higher.

Real estate stock photo / Photo by Mun Ho-nam munonam@

Although the sales price index in Seocho-gu, which had maintained a strong upward trend, declined in August, riverside apartments around the Han River still remain robust. The ‘Acro Vista (205.07㎡)’ in Seocho-dong, Seocho-gu, which was sold this month, was traded at 3.8 billion KRW, 300 million KRW higher than the previous transaction in October last year, which was 3.5 billion KRW. The Korea Real Estate Board’s weekly sales price index fell for the first time in the third week of August (106.2), down 0.01% from the previous week, and has been declining for seven consecutive weeks. Last week’s sales price index was 105.9, down 0.2 points from a month ago.

The prestige of high-priced riverside complexes remains strong in other districts as well. Cheongdam Xi (89.115㎡) in Cheongdam-dong, Gangnam-gu, sold last month for 3.65 billion KRW, setting a new record price, which is 340 million KRW higher than the previous transaction in October last year. The previous record price was 3.5 billion KRW in February last year, which is 150 million KRW lower. The ‘Gangbyeon Dongyang (84.56㎡)’ in Seongsu-dong 1-ga, Seongdong-gu, which was traded for the first time in two years, also set a new record by selling for 2.5 billion KRW last month. This is 700 million KRW higher than the previous transaction in May 2020, which was 1.8 billion KRW. A real estate agent near Cheongdam-dong said, “There are not many listings in this area, and sellers are not rushing to sell, so transactions are happening at slightly higher prices than before.”

Yoon Sumin, a real estate specialist at NH Nonghyup Bank, said, “The record prices of high-priced riverside complexes ultimately come from the uniqueness derived from scarcity,” adding, “Banpo Jugong and Apgujeong Hyundai Apartments are premium reconstruction complexes, and Cheongdam Xi is an irreplaceable area among new constructions, so the value of scarcity is reflected in the prices.”