Rising Prices of Aging Apartments Built in the 1970s
Growing Optimism for Deregulation Despite Land Transaction Permission Zone Restrictions
In Yeouido's market of aging apartments over half a century old, rebound transactions are emerging one after another. With the easing of regulations by Seoul Mayor Oh Se-hoon opening the way for ultra-high-rise reconstruction, buying demand is picking up in Yeouido, which is still designated as a land transaction permission zone.
According to the Ministry of Land, Infrastructure and Transport's real transaction price disclosure system on the 15th, a 109.4㎡ unit in Hanyang Apartment (588 households) in Yeouido-dong, Yeongdeungpo-gu, Seoul, completed in 1975, changed hands for 1.99 billion KRW on the 7th. After hitting an all-time high of 2.03 billion KRW in April last year, there was a trading gap for over a year, but following a sale at 1.91 billion KRW in May, it rebounded by 80 million KRW within a month. The current lowest asking price is 2.15 billion KRW, and the highest asking price reaches 2.3 billion KRW.
The 149.5㎡ unit in the same apartment also saw a sharp rise in actual transaction prices from 2.1 billion KRW in April to 2.4 billion KRW in May, closely chasing the highest price of 2.58 billion KRW recorded in August 2021.
Rebound transactions also appeared in the Sibum Apartment (1,584 households), the oldest in Yeouido built in 1971. A 118.1㎡ unit that was traded for 2 billion KRW in December last year, during the deep real estate slump, was sold for 2.04 billion KRW in January and then for 2.2 billion KRW in both April and May, which is 160 million KRW higher. A smaller 79.2㎡ unit also rose from 1.7 billion KRW in April to 1.76 billion KRW in May in actual transaction prices.
Yeouido, designated as a land transaction permission zone since 2021, has experienced a severe trading freeze during the real estate downturn. Even gap investments involving leasehold sales were impossible, and in October last year, there was only one actual transaction recorded. The recent surge in rebound transactions in Yeouido's real estate market is due to the recent easing of Seoul city regulations, which opened the way for ultra-high-rise reconstruction. In April, the city allowed up to 200 meters in height and a maximum floor area ratio of 800% for apartment reconstruction through the apartment district unit plan. Additionally, the Yeouido Financial Center district unit plan designated the area around Yeouido Station as a financial special development promotion district, enabling development with a floor area ratio exceeding 1000%, which has sparked buying demand. In May alone, 33 transactions occurred in Yeouido-dong, the highest number since April 2020 (42 cases).
Concrete reconstruction plans through Seoul's rapid integrated planning for each complex are also attracting demand. For Hanyang Apartment, a rapid integrated plan confirmed in January envisions redevelopment into a mixed-use complex with up to 54 floors and 1,000 households. The Sibum Apartment completed a blueprint last November for reconstruction into a complex with up to 65 floors and 2,500 households.
The head of a real estate agency in Yeouido explained, "Because the area is very old and designated as a land transaction permission zone requiring actual residence, the trading gap was long, but recently, with regulation easing and rapid integrated planning, Seoul city is clearly pushing Yeouido reconstruction, so buyers are accepting higher asking prices, resulting in rebound transactions."
Meanwhile, due to recent concerns about unsold units and rising construction costs, construction companies have halted bidding competition in the reconstruction and redevelopment market. However, Yeouido is expected to be an exception. With increased profitability from regulation easing and its symbolic status as a financial center, Hanyang Apartment plans to announce a bidding notice for contractor selection in June. Hyundai Engineering & Construction, Samsung C&T Construction Division, and POSCO E&C are expected to fiercely compete to win the title of ‘Yeouido’s first reconstruction.’
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