The government has revealed unprecedented incentives to kickstart the development of the first-generation new towns, causing a stir in the real estate market. In particular, Dunsan-dong in Daejeon, a traditional affluent neighborhood famous for 'Keumokhan' (Clover, Magnolia, Hanmaru), is considered a prime beneficiary. With significantly improved feasibility for reconstruction projects, the entire Dunsan-dong area is expected to transform into a new apartment district, further solidifying its status as a 'top-tier location.'
[Scenery of Dunsan-dong apartments with momentum gained in large-scale development, Source: Naver Map]
On the 7th, the Ministry of Land, Infrastructure and Transport unveiled the 'Special Act on the Maintenance and Support of Aging Planned Cities' to promote the redevelopment of first-generation new towns. The goal is to establish institutional measures necessary to accelerate reconstruction in aging residential areas such as first-generation new towns and supply high-quality housing.
The core of the special act is the relaxation of reconstruction regulations. The weight of structural safety evaluations, which have been a hurdle in passing safety inspections, will be reduced, and sites contributing to infrastructure expansion (large-scale metropolitan transportation facilities, office facilities, etc.) will be exempted from safety inspections altogether.
Additionally, the act includes a plan to raise the statutory floor area ratio (FAR) cap for first-generation new towns, currently at a maximum of 300%, to over 500%. A higher FAR increases sales revenue, thereby activating reconstruction projects. The current apartment height of 15 to 20 floors is also expected to increase to over 30 floors.
Reconstruction of Aging Apartments in Dunsan-dong Gains Momentum
The nationwide aging residential sites that meet the criteria set by the special act include first-generation new towns such as Bundang and Ilsan, as well as Dunsan-dong in Daejeon. This is because the act opens the door for 'regional hub new towns' with over 1 million square meters of land that have passed 20 years since land development completion to be eligible for application.
Experts predict that with the special act boosting reconstruction and remodeling, the 'Dunsan-dong Renaissance' will begin in earnest. The FAR, currently around 210-220%, will increase, significantly enhancing the feasibility of reconstruction projects. The industry expects that raising the FAR to 300% will be achievable. Daejeon City has also announced it will proactively proceed with administrative procedures to apply the special act to Dunsan-dong, raising expectations for future development.
With active redevelopment projects, residential environments, living conditions, and transportation infrastructure will be greatly improved, enhancing settlement conditions and driving up housing prices in the area. Representative examples include Gaepo-dong, where large-scale redevelopment projects have been underway starting with Gaepo Jugong Complex 2, and Banpo-dong, where focused reconstruction has been progressing since 2006.
According to real estate R114 reps, the actual transaction prices in Gaepo-dong and Banpo-dong rose approximately 2.3 times from 2010 to 2022, establishing them as representative affluent neighborhoods in Seoul. In contrast, Yeouido-dong, which held a similar status at the time, saw sluggish reconstruction, with price increases of only 1.7 times during the same period, falling short of Seoul's average of 2.2 times.
As expectations for reconstruction rise, housing listings in Dunsan-dong are also decreasing. According to the real estate big data platform Asil, as of February 20, the number of apartment listings in Dunsan-dong dropped by 5.7% compared to a month earlier. Listings in Magnolia Apartments decreased by 13.6%, and Clover Apartments by 9.3%, indicating that homeowners are withdrawing their properties from the market.
A local real estate agency official said, "There is high anticipation that Dunsan-dong will solidify its position as the unrivaled number one affluent neighborhood," adding, "Although a sharp rebound is not immediately visible, as urgent sale listings are being withdrawn, homeowners are carefully observing the market atmosphere."
Newly Launched Complexes in Dunsan-dong Also Benefit
New residential products being launched in Dunsan-dong are also expected to greatly benefit from the area's development. A representative example is 'Grand Le Pied,' supplied by real estate developer Miraein on the prime Homeplus site in Dunsan-dong. Daewoo Engineering & Construction is the contractor, and the complex will rise 47 floors?the tallest in the Dunsan area?with 5 buildings and a total of 832 units of medium to large sizes (119 and 169 square meters), becoming a landmark in the area.
A sales official said, "With expectations that Dunsan-dong's development will accelerate due to the first-generation new town special act, inquiries have increased nationwide, including from the metropolitan area," adding, "Since the prime location is already well known, there are many inquiries about design and product features, and we are putting great effort into meeting these customer expectations."
In fact, Grand Le Pied is designed with medium to large floor plans allowing for spacious living, and features a large-scale community area of approximately 3,600 square meters (about 1,100 pyeong), including a three-lane swimming pool called 'Pied Pool,' a dry sauna with a jacuzzi, a golf studio, a fitness club, a sky lounge, and a cafeteria, greatly enhancing residents' living convenience.
Additionally, a concierge lounge offers various services, and to provide premium breakfast services, a memorandum of understanding (MOU) has been signed with Shinsegae Food. The complex also stands out with retail facilities capable of hosting a large supermarket within the premises.
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