Push Sales Amid Financial Cost Pressure... 92.2% of Units in the Seoul Metropolitan Area
General Sales Schedule Starts from the 6th, Attention on Olympic Park Foreon’s Success
1st floor of the model house for Dunchon Jugong Apartment (Olympic Park Foreon) in Dunchon-dong, Gangdong-gu, Seoul. Visitors are viewing the scale model of the complex / Photo by Seoyul Hwang chestnut@
[Asia Economy Reporter Cha Wanyong] In the final month of this year, a large volume of reconstruction and redevelopment housing units will be released. This is because complexes that had postponed sales due to interest rate hikes, rising raw material costs, and economic recession have given up holding out and decided to proceed with sales. These redevelopment and reconstruction complexes seem to have concluded that if the trend of interest rate hikes continues into next year, the sales market will be more challenging next year than this year.
According to Real Estate 114 REPS on the 4th, a total of 18 complexes with 32,177 housing units are planned to be sold nationwide this month through reconstruction and redevelopment maintenance projects. Of these, 12,430 units, excluding those allocated to association members, will be offered to the general public. This is about 2.8 times more than the 4,455 units in December last year.
By region, Seoul has the largest number with 6,789 units, followed by Gyeonggi Province (3,425 units), Incheon (1,249 units), Gangwon Province (851 units), and Busan (116 units). The volume planned in the metropolitan area alone is 11,463 units, accounting for 92.2% of the total.
The sales industry analyzes that reconstruction and redevelopment maintenance projects have no choice but to push sales as financial costs increase due to interest rate hikes and project financing (PF) refinancing loans are blocked.
In fact, the real estate development market is rapidly freezing due to the PF market, raising concerns about funding difficulties. According to the implementation industry, the interest rates on recently issued real estate PF loans are around 12-15% per annum. Compared to about 3% a year ago, this is a sharp increase of up to three to five times. Even this applies only when large projects or major construction companies provide credit guarantees; there are complaints from the industry that small and medium-sized projects have no financial institutions willing to lend money.
Nevertheless, the sales industry expects that interest in the sales market will focus on the apartment sales of major maintenance projects in the metropolitan area, which were highly anticipated and are concentrated at the end of the year. In particular, after the government raised the mid-term loan limit last month from 900 million KRW to 1.2 billion KRW in sales price, complexes that were previously considered ineligible for loans have now entered the loan eligibility range, raising expectations for successful sales.
The sales industry is immediately focusing on the sales success of the largest reconstruction project in Seoul, Dunchon Jugong Apartment (Olympic Park Foreon). Starting with special supply on the 5th and general sales from the 6th, if the subscription competition rate for this complex is high and the official contracts proceed smoothly, it is expected to be a 'green light' for the recently sluggish sales market. Olympic Park Foreon is a large complex with 85 buildings ranging from three basement floors to 35 floors above ground, supplying a total of 12,032 units, of which 4,786 units with exclusive areas of 29 to 84 square meters, excluding association member units, are for general sale.
In Seongbuk-gu, GS Construction is introducing ‘Jangwi Xi Radiant’ through the Jangwi 4 District redevelopment project. It is a large complex apartment with 31 buildings ranging from three basement floors to a maximum of 31 floors above ground, totaling 2,840 units, of which 1,330 units with exclusive areas of 49 to 97 square meters are for general sale.
In Gwangmyeong City, Gyeonggi Province, GS Construction plans to sell 'Cheolsan Xi The Heritage,' a reconstruction of Jugong 8 and 9 complexes in Cheolsan-dong. It will be developed with 23 buildings ranging from three basement floors to a maximum of 40 floors above ground, totaling 3,804 units, with 1,631 units of 59 to 114 square meters for general sale.
Posco Construction will supply 'The Sharp Arte,' an apartment complex redeveloped from Jooan 10 District in Michuhol-gu, Incheon. It consists of 10 buildings ranging from two basement floors to 29 floors above ground, totaling 1,148 units, of which 764 units are for general sale.
Park Jimin, head of Wolyong Subscription Research Institute, said, “Most reconstruction and redevelopment project sites are located in old downtown areas that used to serve as residential centers, so infrastructure is already well established, but there are many aging houses, resulting in high demand for new apartments.” He added, “Since there is a possibility of schedule delays due to the nature of maintenance projects, it is better to aim for subscriptions in places where sales have become visible.”
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