Daechi, Cheongdam, Samsung, Jamsil-dong Land Transaction Permission Zones Extended for 1 More Year (Comprehensive)

Approved by Seoul City Dokaewi on the 7th... Until June 22, next year
"An inevitable measure to prevent overheating of the real estate market"

The designation period for land transaction permission zones in Daechi, Cheongdam, and Samseong-dong in Gangnam-gu, Seoul, as well as Jamsil-dong in Songpa-gu, has been extended by one year.

Jamsil MICE Project Bird's-eye View

On the 7th, the Seoul Metropolitan Government held an urban planning committee meeting and announced the approval of the re-designation plan for the land transaction permission zones in Daechi, Cheongdam, Samseong, and Jamsil-dong near the International Exchange Complex District. As a result, these four neighborhoods will remain land transaction permission zones until June 22 of next year.

The land transaction permission zone system requires obtaining permission from the mayor or district office head when trading land above a certain area. Transactions can only be conducted for actual residence purposes, making gap investments, such as sales with jeonse deposits, impossible.

A Seoul city official explained, "This is an unavoidable measure to prevent overheating of the real estate market."

The areas of Daechi, Cheongdam, Samseong, and Jamsil-dong are undergoing large-scale development projects related to the International Exchange Complex District. The International Exchange Complex District is a project to create a MICE (Meetings, Incentives, Conferences, and Exhibitions) hub linking four core industry facilities (international business, sports, entertainment, exhibition/convention) and waterfront spaces across 1.66 million square meters, stretching from COEX to Hyundai Motor GBC (formerly KEPCO site) to Jamsil Sports Complex.

Seoul city imposed the land transaction permission system on this area in June 2020 due to concerns about speculative demand inflow. The period has been extended twice since then and was set to expire on the 22nd.

Residents have demanded the lifting of the land transaction permission zone, citing "infringement of property rights." Yook Kyung-joon, a member of the People Power Party representing Gangnam, recently delivered a petition signed by over 5,500 residents to Seoul Mayor Oh Se-hoon requesting the lifting of the designation.

However, Seoul city judged that lifting the permission zone could lead to a sharp rise in land prices and an influx of speculative forces.

A senior Seoul city official explained, "The extension of the land transaction permission zone despite residents' demands is interpreted as a result of considering the recent continuous rise in housing prices and fairness with other land transaction permission zones such as Apgujeong, Yeouido, Seongsu, and Mok-dong."

In fact, Seoul's housing prices, which had been plummeting due to high interest rates, have recently turned upward, centered on the Gangnam area. According to the Korea Real Estate Board, apartment prices in Songpa-gu rose by 0.22% in the fifth week of May compared to the previous week, the highest among the 25 autonomous districts. Gangnam-gu also saw a 0.13% increase, mainly in Yeoksam and Daechi-dong. In other words, lifting the land transaction permission zone near the International Exchange Complex District is likely to attract speculative demand and stimulate the market.

There is also the issue of fairness with the land transaction permission zones in Apgujeong-dong in Gangnam-gu, Mok-dong in Yangcheon-gu, Yeouido-dong in Yeongdeungpo-gu, and Seongsu-dong in Seongdong-gu, whose designation periods were extended in April. It would be difficult to avoid resident backlash if only the land transaction permission zones in Daechi, Cheongdam, Samseong, and Jamsil-dong were lifted.

A real estate industry official said, "As the number of apartment transactions and housing prices have been rising in Seoul recently, expectations for lifting the land transaction permission zones were low, so it is unlikely to have a significant impact on the market."

However, starting from October 19, the revised 'Real Estate Transaction Reporting Act,' which allows regulation by specifying the use and classification of land, will be implemented, and Seoul plans to review and promote measures applying this law. In October last year, the Ministry of Land, Infrastructure and Transport revised the land transaction permission zone guidelines to allow 'pinpoint designation' by administrative districts or individual parcels instead of legal neighborhoods, and is currently preparing related enforcement ordinances.