[Real Estate Investment] 'Bunyangga Sanghwanje' to Boost Big Market in Gangnam 3 Districts This Second Half

After more than two years of stagnation, Gangnam area pre-sales are set to resume in the second half of this year. The last pre-sale in the Gangnam area was the 'Raemian One Bailey' in Banpo-dong, Seocho-gu, Seoul, which was pre-sold in June 2021 and is scheduled for move-in next month. Recently, with rising raw material prices and labor costs pushing up pre-sale prices, the Gangnam area is drawing more attention than ever due to the application of the pre-sale price ceiling system. This is because buyers can expect a profit difference of several hundred million won compared to surrounding market prices. Although there are criticisms that these pre-sales are only for cash-rich buyers, if the pre-sale prices are not significantly different from areas without the ceiling system, it is worth considering challenging pre-sale complexes in the Gangnam area.

A bird's-eye view of Cheongdam Le El (Samik Apartment Reconstruction) in Cheongdam-dong, Gangnam-gu, Seoul. / Photo provided by Seoul City

◆ Over 2,000 units for general sale in the three Gangnam districts including 'Cheongdam Le El'

This second half of the year will see a rare large-scale market in the three Gangnam districts (Gangnam, Seocho, Songpa-gu). According to Real Today on the 5th, nine complexes will be launched during this period. Out of a total of 11,546 units, 2,364 units are for general sale.

Among them, 'Cheongdam Le El,' a reconstruction of Samik Apartment in Cheongdam-dong, Gangnam-gu, is considered a major project. Cheongdam Le El will be built with a maximum of 35 floors, 9 buildings, and 1,261 units. Of these, 176 units are for general sale. This is the first private pre-sale in Gangnam-gu in over three years since July 2020. There is also 'DH Daechi Edelweiss' in Daechi-dong, which has been delayed since last year, with 282 units (79 for general sale). In Dogok-dong, 'Raemian Reventus,' a reconstruction of Samho Apartment, is waiting for pre-sale with 308 units (133 for general sale).

In Seocho-gu, 'Sinbanpo Maple Xi' in Jamwon-dong will be built with a maximum of 35 floors, 29 buildings, and 3,307 units. In Bangbae-dong, 'Raemian One Perla,' a redevelopment of Bangbae 6 district, has 1,097 units (465 for general sale), and 'Acro Ritz County,' a reconstruction of Samik Apartment, has 707 units (141 for general sale) preparing for pre-sale. 'Raemian One Pentas' in Banpo-dong with 651 units (292 for general sale) is also notable.

In Songpa-gu, where apartment prices continue to rise, two complexes are preparing for pre-sale: 'Hillstate e-Pyeonhansesang Munjeong' in Munjeong-dong and 'Jamsil Raemian I-Park' in Sincheon-dong. They have 1,265 units (296 for general sale) and 2,678 units (578 for general sale), respectively. 'Jamsil Le El' in Sincheon-dong is reportedly postponed until next year.

◆ Seoul pre-sale complexes more price competitive than Yongin, Gyeonggi-do

According to the Housing and Urban Guarantee Corporation (HUG), as of the end of May, the average pre-sale price for private apartments in Seoul was 31,066,200 KRW per 3.3㎡, rising for three consecutive months. After recording 30,643,800 KRW in January this year, it has maintained the 30 million KRW range for five consecutive months. Compared to May last year, it increased by 10.11%.

During the same period, the nationwide increase was 11.77%. The rise was greater than the Seoul average, influenced by inflation and the government's large-scale lifting of real estate regulation zones earlier this year. Currently, the regulated areas are only the three Gangnam districts and Yongsan-gu nationwide. In other words, only these four autonomous districts are subject to the pre-sale price ceiling system.

In fact, in Gyeonggi-do areas such as Yongin and Gwangmyeong, complexes with pre-sale prices exceeding 1 billion KRW for the standard 84㎡ units are emerging one after another. In May, 'e-Pyeonhansesang Yongin Station Platform City' in Giheung-gu, Yongin, recorded the highest pre-sale price in Yongin history at 1.235 billion KRW, and 'Gwangmyeong Central I-Park,' a redevelopment of Gwangmyeong 4R district, set the pre-sale price for 84㎡ units excluding lower floors at over 1.2 billion KRW.

On the other hand, 'Hwigyeong Xi Decencia,' pre-sold in Hwigyeong-dong, Dongdaemun-gu, Seoul in April, had a highest pre-sale price of 976 million KRW for 84㎡ units, below 1 billion KRW. 'Saejeol Station Doosan We've Trigeum' supplied in Sinsa-dong, Eunpyeong-gu, also had a highest price of 990 million KRW. Seoul complexes, which recorded average competition rates of dozens to one in first-priority subscriptions, have pre-sale prices cheaper than those in Gyeonggi-do.

The complexes about to be pre-sold in the Gangnam area are no exception. 'Hillstate e-Pyeonhansesang Munjeong' in Munjeong-dong, Songpa-gu, scheduled for pre-sale this month, has a pre-sale price of 35,823,906 KRW per 3.3㎡. Compared to the nearby older complexes' transaction prices around 40 million KRW per 3.3㎡, it is cheaper. This is why interest is focused on Gangnam area pre-sale complexes priced below market amid rapidly rising metropolitan area pre-sale prices.

Ham Young-jin, head of the Zigbang Big Data Lab, said, "Considering the various costs involved in the process (since most are redevelopment projects) in the Gangnam area, the average pre-sale price per 3.3㎡ is not unreasonably low. However, compared to surrounding existing complexes, there is a price difference advantage, so many interested buyers seem to be paying attention."