The apartment auction market in the Gangnam area, which had been sluggish, is regaining popularity. As the housing market overall is recovering, investment demand is gathering mainly around Gangnam, where expectations are high. In particular, some reconstruction complexes with many favorable conditions have attracted more than 40 bidders, with some units being sold at prices over 200 million KRW higher than the market price.
According to Gigi Auction, a court auction specialist company, the average winning bid rate for apartments auctioned in the four Gangnam districts (Gangnam, Seocho, Songpa, and Gangdong) last month was 55.5%. This figure is more than double the average winning bid rate of 24.8% for all apartments in Seoul. Compared to the previous month’s average winning bid rate of 39.1% in the four Gangnam districts, it increased by 16.4 percentage points.
By district, Gangnam-gu and Songpa-gu each saw 3 out of 5 auctioned units sold. Gangdong-gu had 1 unit auctioned and sold, while Seocho-gu found new owners for 3 out of 7 units.
Many of these units experienced fierce competition. On the 18th of last month, an 84㎡ (exclusive area) unit in Eonma Apartment, Daechi-dong, Gangnam-gu, which was auctioned at the Seoul Central District Court, attracted a total of 45 bidders, showing high interest. This unit was sold at 2,652.88 million KRW, which is 95% of the appraised value of 2,790 million KRW.
This price is about 200 million KRW higher than the actual transaction price. According to the Ministry of Land, Infrastructure and Transport’s real transaction price disclosure system, the highest price for an 84㎡ unit in this complex last month was 2,430 million KRW. Considering that the actual transaction price had dropped to 2,150 million KRW as recently as January, this auction price is notably higher than the market price.
In Songpa-gu, 19 bidders competed for a 0.8㎡ partial share of a 76㎡ unit in Jamsil Jugong Complex 5 on the 1st of last month. Ultimately, this unit was sold at 138% of the appraised value, 38.58 million KRW, with the co-owner exercising the right of first refusal to purchase at this price. In Bangi-dong, a 135㎡ unit in the Olympic Athletes’ Village was sold on the 8th of last month at 2,938.8 million KRW, which is 97% of the appraised value of 3 billion KRW.
The popularity of reconstruction complexes with many favorable conditions is due to the characteristics of the land transaction permission zones. When trading real estate located in these zones, land transaction permission must be obtained; however, properties auctioned under the ‘Civil Execution Act’ are exempt from obtaining separate local government transaction permission. Furthermore, acquiring apartments through auction exempts buyers from submitting a financing plan and does not impose a two-year residency requirement, enabling ‘gap investment’ where the buyer can lease the property while owning it. There is also no mandatory holding period, allowing immediate transfer of ownership, which is considered a strong advantage.
Additionally, the improving outlook for the real estate market has revived the sales market. According to the Korea Real Estate Board, the apartment price change rate in the southeastern Seoul area, which includes the four Gangnam districts, has been on a continuous rise for seven weeks since turning positive in the third week of April. The monthly housing trend released by KB Kookmin Bank also shows that the ‘KB Leading Apartment 50’ index rose by 0.10% last month compared to the previous month, marking the first increase in 11 months.
Lee Joo-hyun, a senior researcher at Gigi Auction, explained, “As the real estate market overall recovers, investment demand is returning to the auction market. In particular, the easing of loan regulations on ultra-high-priced apartments in regulated areas has increased competition rates for apartment auctions in the Gangnam area.”
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