[Report] "No One Lives There Even After Reconstruction Decision"

1·10 Deregulation Measures Announced
But No Purchase Inquiries in Seoul Mapo-gu Woosung, Dohwa Hyundai, etc.
Due to Cooling in Gyeonggi

A banner celebrating the successful safety inspection is hung at the main entrance of Woosung Apartment in Dohwa-dong, Mapo-gu, Seoul.

"There are no purchase inquiries. The policy to ease reconstruction regulations is still just a shiny but sour fruit." (Representative of C Real Estate Agency, Dohwa-dong, Seoul)

Although the government announced the January 10th measures emphasizing the easing of reconstruction and redevelopment regulations, buyer sentiment remained hard to find even in complexes over 30 years old that passed safety inspections.

On the 13th, Dohwa 3 District Woosung Apartments, a reconstruction promotion complex in Dohwa-dong, Mapo-gu, Seoul, showed a quiet scene on the first weekend after the policy announcement. Five banners reading "Congratulations on passing the detailed safety inspection" were hung at the apartment's main gate. These banners were put up by construction companies and trust companies hoping to participate in the reconstruction project. Some real estate agencies even wrote "urgent sale" and "super urgent sale" listings on whiteboards to attract customers' attention. However, foot traffic to these agencies was sparse.

The representative of A Real Estate Agency explained, "Woosung Apartments have only been designated as a maintenance zone, and the project can now proceed, but the consent collection for establishing the promotion committee has not yet been done." He added, "The resident ownership ratio is about 50%, so they are still in the stage of filling out the contact list." Dohwa 3 District Woosung Apartments, with 1,222 households, was completed in 1991 and passed the reconstruction safety inspection last November. Having received an E grade, the project can proceed without a detailed safety inspection. The promotion preparation committee will hold an explanatory meeting on the 18th, inviting urban planning companies ahead of establishing the maintenance project plan.

Nearby real estate agencies posted notices stating that the January 10th measures would allow speeding up from the promotion committee to the establishment of the association. However, promotional materials left by construction companies such as DL E&C and Samsung C&T were also seen nearby.

The representative of A Real Estate Agency said, "There have been no actual transactions for over six months, and purchase inquiries are almost nonexistent. Since interest rates are still high and the jeonse (long-term deposit lease) rate is low for these older apartments, asking prices remain at levels from two years ago." The asking price for a 68㎡ unit ranges from 1.05 billion KRW for urgent sales to the high 1.1 billion KRW range up to 1.2 billion KRW.

The representative of B Real Estate Agency said, "The policy has no effect at all. Prices neither rise nor fall; the market is indifferent." He added, "Even if all reconstruction regulations are lifted, the burden charges are high, and one might have to invest over 500 million KRW on average, so it's questionable who would want to proceed. Recent conflicts over construction costs in Daejo 1 District and Jamsil Jinju, as well as situations like Taeyoung Construction's workout, contribute to this atmosphere, which seems likely to persist for a long time."

A large banner announcing the passing of the preliminary safety inspection is hung at Dohwa Hyundai 1st Apartment in Mapo-gu, Seoul.

The atmosphere was similar at Hyundai 1st Complex in Dohwa-dong, Mapo, where a banner reading "Passed Preliminary Reconstruction Safety Inspection at Mapo District Office" was hung. Hyundai 1st Complex, completed in 1996, houses 1,021 households. However, according to real estate agencies, there are not many listings due to differing perspectives between sellers and buyers, and purchase inquiries are scarce.

The representative of C Real Estate Agency in Dohwa-dong said, "Since reconstruction is being promoted, fewer listings are coming out compared to before. With the general election approaching and after passing the preliminary safety inspection, sellers expect prices to rise, while buyers are pessimistic about the market atmosphere, so opinions differ."

He added, "If the reconstruction easing measures coincide with a real estate market upswing, they could have an effect, but right now, the market is in a lull, so there seems to be little impact. Even if safety inspection regulations are eased, reconstruction will ultimately depend on project feasibility. If designation of maintenance zones and approval of association establishment become possible simultaneously, and if construction companies can be selected before project implementation approval, then borrowing to prepare for safety inspections might become feasible."