Cases of Winning Bids Above Appraised Value Surge
Housing Prices Rebound, Investment Demand Rises Amid Rapid Rebuilding
Mandatory Residence Obligation Disappears After Auction in Permitted Zones
High-priced apartments in Gangnam, including Apgujeong-dong, that have been put up for auction are frequently being sold at prices higher than their appraised values. This trend reflects a clear rebound in housing prices in the area, coupled with a recent surge in reconstruction projects attracting investment demand. Auctions offer the advantage of gap investment opportunities even in land transaction permission zones, as there is no obligation for actual residence.
According to Gigi Auction, a data specialist in auctions and public sales, on the 10th of this month, a 112㎡ (exclusive area) unit in Hyundai 8th Complex, part of Apgujeong 4 District, was sold at auction for 3.81409 billion KRW. The appraised value of the property was 3.535 billion KRW, meaning it found a new owner at a price 279.09 million KRW higher. The winning bid price was close to the apartment's highest recorded transaction price of 3.9 billion KRW (July 2022).
Although ultimately dismissed, on the 12th of last month, a 118㎡ unit in Hyundai 4th Complex, part of Apgujeong 3 District, was auctioned off at 5.527999 billion KRW after competition among 10 bidders. This was about 125% of the appraised value of 4.43 billion KRW. The second-highest bid at that time was 5.138 billion KRW, which corresponded to 116% of the appraised value.
On June 1st, a 74㎡ unit in Miseong 2nd Complex, part of Apgujeong 1 District, found a new owner at 2.7795 billion KRW. This price was 98% of the appraised value of 2.84 billion KRW. While it did not reach the highest transaction price recorded last year of 3.21 billion KRW, it was the highest price so far this year.
The popularity of Apgujeong-dong apartments in the auction market is largely influenced by the clear rebound trend in the real estate market of the three Gangnam districts. Since the government's regulatory easing earlier this year, reconstruction projects and high-quality residential complexes in the Gangnam 3 Districts have been leading the recovery of Seoul's real estate market. According to Real Estate R114, apartment prices in the Gangnam 3 Districts rose by 0.11% in July compared to the previous month. In contrast, other autonomous districts excluding the Gangnam 3 Districts saw a 0.04% decline, showing a clear temperature difference.
Moreover, the recent acceleration of reconstruction in the Apgujeong area is stimulating auction demand. On the 11th of last month, the Seoul Metropolitan Government confirmed the rapid integrated planning for Apgujeong Districts 2 to 5, announcing plans to reconstruct up to 50 floors and 11,800 households. Notably, Apgujeong is a land transaction permission zone, but unlike regular sales, auctions do not require an actual residence obligation, allowing gap investment. Multi-homeowners also do not need to submit an additional purchase reason statement when acquiring property within the land transaction permission zone.
Lee Joo-hyun, a senior researcher at Gigi Auction, said, "Some apartments in regulated areas such as Apgujeong-dong, Gangnam 3 Districts, and Yongsan District are quickly sold out in the first or second rounds, driving up the overall auction success rate and winning bid rate in Seoul." However, he added, "There are significant regional disparities, and with ongoing regulations on total debt service ratio and high interest rates, it remains to be seen whether this will lead to a full recovery trend."
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