Priority Local Main Subscription Begins
Special Supply Exclusive 39㎡ Faces Repeated Undersubscription
"Need to Consider Whether High Interest Rates Are Manageable"
Seoul Gangdong-gu Dunchon Jugong Reconstruction Site (Olympic Park Foreon) / Photo by Hyunmin Kim kimhyun81@
[Asia Economy Reporter Noh Kyung-jo] The Dunchon Jugong Apartment complex (Olympic Park Foreon) in Gangdong-gu, Seoul, considered the largest reconstruction complex since the era of Dangun, began its main subscription on the 6th, starting with the first priority local area. However, some special supply categories failed to overcome the limitations of small-sized units and were undersubscribed, leading to forecasts that the success of the main subscription will depend on whether buyers can bear the burden of high interest rates and high sale prices.
According to the Korea Real Estate Agency's subscription homepage on the 6th, the special supply for Olympic Park Foreon held the previous day attracted a total of 3,580 applicants for 1,091 units, recording an average competition rate of 3.28 to 1. The units supplied by exclusive area were ▲29㎡ 5 units ▲39㎡ 609 units ▲49㎡ 477 units.
For the first-time homebuyer category, 80 people applied for 1 unit of 29㎡, and 629 people applied for 159 units of 39㎡. For the 49㎡ units, which had 94 units available, 1,870 people applied, resulting in a competition rate of 19.89 to 1.
For the special supply for newlyweds, 13 people applied for 3 units of 29㎡, and 653 people applied for 203 units of 49㎡. In the category for supporting elderly parents, 41 people applied for 28 units of 49㎡. For the institution recommendation category of the same size, 125 people applied for 90 units.
However, some categories were undersubscribed. For the multi-child family category, only 45 people applied for 62 units of 49㎡. Also, except for the first-time homebuyer category, all other categories for 39㎡ units failed to fill the available units. The newlywed category for this size had 90 applicants for 301 units, the elderly parent support category had 5 applicants for 34 units, and the institution recommendation category had 28 applicants for 115 units.
The low competition rate in the special supply is analyzed to be due to the fact that only small-sized units were targeted. In speculative overheated districts such as Seoul, if the sale price exceeds 900 million KRW, the units are not allocated for special supply. Small-sized units are placed in 11 out of 85 buildings, with up to 10 units sharing a corridor on one floor.
The possibility of undersubscription in the main subscription is relatively low. However, the large volume and the somewhat high sale price of 38.29 million KRW per 3.3㎡ have led to criticisms that the timing is not appropriate.
Kim Hyo-seon, Senior Real Estate Specialist at NH Nonghyup Bank, said, "In a situation where sale prices are falling, there is no immediate big merit, and the timing is definitely not good," adding, "Except for 84㎡ units, mid-term loans are possible, but it is necessary to consider whether buyers can handle the high interest rate situation." Olympic Park Foreon is subject to regulations such as 2 years of residence, 8 years of resale restriction, and re-winning restrictions, meaning that tenants cannot be rented out after completion. Buyers must purchase entirely with their own funds.
The subscription schedule proceeds with first priority local area applicants (residents of Seoul for 2 years or more) on the 6th, other areas (residents of Seoul for less than 2 years and metropolitan area residents) on the 7th, and second priority on the 8th. The announcement of winners is on the 15th of next month, and the contract period is from January 3 to 17 of next year. Move-in is scheduled for January 2025.
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