"Catch the Subscription Winners"... Construction Companies' Tearful 'Financial Marketing'

As Unsold Units Increase, Special Measures Such as Discounted Sales and Interest-Free Interim Payments Implemented

[Asia Economy Reporter Kim Hye-min] As the cold wave in the subscription market leads to an increase in cases of contract cancellations even after winning, construction companies have unusually pulled out financial marketing cards. Beyond free balcony expansions or interest-free interim payments, there are now unprecedented benefits such as discounts on sale prices or guaranteed loan interest rates. With the real estate market expected to remain sluggish next year, this can be seen as a desperate measure to reduce unsold inventory.

According to the sales industry on the 22nd, 'Jangwi Xi Radiant' in Seongbuk-gu, Seoul, which announced winners on the 16th, recently introduced a new interim payment loan interest rate guarantee system ahead of the official contract. It guarantees the interim payment loan interest up to 6%, and the project owner bears the interest on any excess over 6%.

This is an additional benefit to reduce the burden on contract holders during the interest rate hike period, following the deferred interest payment system where interim loan interest is paid before moving in. Introducing such a bold marketing strategy ahead of the official contract on the 27th seems to stem from a sense of crisis that many may cancel contracts even after winning. Jangwi Xi Radiant is a large-scale apartment complex built by the major construction company GS Construction, but despite being a rare Seoul subscription, the subscription competition rate was only 4.68 to 1. The winning score was also not high, with winners scoring in the 20s.

[Image source=Yonhap News]

In fact, this year, the Seoul subscription market has seen intensified selection, and cases of contract cancellations have increased even though units were sold out at the time of subscription. Unsold units that fail to be contracted proceed to non-priority subscriptions, but the smaller the complex, the farther from Seoul’s center, or the weaker the construction company’s brand power, the more they struggle, often resorting to 'Nth round non-priority subscriptions.'

These complexes are engaging in 'tearful bold marketing' to clear unsold inventory. 'Cantavil Suyu Palace' in Suyu-dong, Gangbuk-gu, faced controversy over high sale prices, resulting in about 91% of its 216 units remaining unsold. Subsequently, they offered a 15% discount on the sale price and even covered management fees, launching a discounted sale under these bold conditions. As non-priority subscriptions dragged on in Oryu-dong, Guro-gu, 'Cheonwang Station Moa Elga Treview' also offered a condition of paying a total of 30 million KRW in cash within one month after the contract.

Expanding beyond Seoul, cases of bold financial marketing are not hard to find. 'Unjeong Prugio Parkline' in Paju-si, Gyeonggi Province, is selling at a price reduced by up to 250 million KRW from the initially set price in the 800 million KRW range. 'Forena Pyeongtaek Hwayang' in Pyeongtaek-si, Gyeonggi Province, also lowered the burden by offering full interest-free interim payments and a fixed first contract deposit of 10 million KRW. 'Misa Anello Switzen' in Hanam-si, Gyeonggi Province, even provided foreign cars as prizes through a lottery for contract holders.

The reason they offer such bold benefits even at a loss is the expectation that the subscription market situation will be even tougher next year. If they cannot secure the sale proceeds amid blocked loan paths, they must proceed with construction and other projects using their own funds. For small and medium-sized construction companies without strong financial power, this can immediately lead to management damage. A construction company official said, "For now, increasing the contract rate is the only way to minimize losses."

However, experts advise that rather than being swayed by financial benefits, one should consider the long-term value of the apartment before subscribing. Ye Kyung-hee, senior researcher at Real Estate R114, said, "The number of complexes offering favorable contract conditions to prevent unsold units is expected to increase. Buyers should actively utilize the benefits but also carefully select by considering their financial capacity and whether the value will increase after moving in."