[Post-Reconstruction Measures] ② Land Share of Old Apartments in Nowon-gu '12 Pyeong'... Bundang '17.7 Pyeong'

Analysis of Land Shares in Apartments Over 30 Years Old
Lower Shares Increase Member Contributions, Hindering Resident Consent
"Effect of Reconstruction Regulation Easing Limited to First-Generation New Towns"

Editor's NoteFollowing the announcement of the fast-track policy allowing reconstruction to begin after 30 years from completion, old apartments in Nowon-gu, Seoul were identified as beneficiaries. However, the atmosphere at the site visited on the 21st was cold. Due to rising construction costs caused by global inflation and the prolonged high-interest rates leading to a real estate market downturn, the mood was assessed as weak for any turnaround. In particular, an analysis by Asia Economy using real estate big data firm Asil (Apartment Actual Transaction Prices) on land shares of apartments over 30 years old (excluding row houses and multi-family houses) in Sanggye, Junggye, and Hagye-dong of Nowon-gu showed that the reconstruction profitability of old apartments in Nowon-gu has significantly declined. Experts analyze that the effect of the government's January 10th policy, which greatly eased reconstruction safety inspection regulations, will be limited to some areas with good business potential such as first-generation new towns.

After the government's announcement on easing reconstruction regulations on the 10th, Nowon-gu in Seoul emerged as a beneficiary, but analyses suggest that the actual project profitability will fall short of expectations. Most apartments in this area are small-sized, and the land share is also small, leading to forecasts that the beneficiaries of the January 10th policy will likely be limited to areas with high business potential such as first-generation new towns.

On the 21st, Asia Economy analyzed the land shares of apartments over 30 years old (excluding row houses and multi-family houses) in Sanggye, Junggye, and Hagye-dong of Nowon-gu through real estate big data firm Asil. The average land share across 64 complexes was 12 pyeong. Junggye-dong (22 complexes) had 12.6 pyeong, Hagye-dong (10 complexes) 11.9 pyeong, and Sanggye-dong (32 complexes) 11.7 pyeong, in that order.

Land share refers to the land area per household (the total land area of the apartment complex divided by the number of households). Generally, if the area per household is large or the number of households in the complex is small, the land share increases.

The land share of old apartments in Nowon-gu is lower compared to old apartments in Bundang, a first-generation new town. Bundang's average land share across 69 old apartment complexes was 17.7 pyeong. This means that Nowon-gu has a higher proportion of small-sized apartments compared to Bundang. The gap is even more pronounced when looking at individual complexes. In Nowon-gu, Hanshin Dongseong in Hagye-dong (completed in 1993, 498 households) had the largest land share at 19.5 pyeong, whereas in Bundang, Hyojachon Mirae Town in Seohyeon-dong (completed in 1994, 160 households) had the largest at 32.8 pyeong. The minimum land share was also nearly twice as large in Bundang at 9.3 pyeong (Hansol 7 Jugong) compared to 5.2 pyeong (Hanshin) in Nowon-gu.

The problem is that the reconstruction feasibility in Nowon-gu is low due to the small land share. A larger land share allows increasing the number of general sale units during reconstruction, thereby reducing additional contributions. Conversely, a smaller land share can increase the burden on association members. This can hinder obtaining the required consent of over 80% of residents to establish the association. This contrasts with Nowon-gu being initially considered one of the biggest beneficiaries of the current government policy. According to Real Estate R114, Nowon-gu has 96,000 apartments over 30 years old, the highest among Seoul's autonomous districts (59% of the total).

Experts point out that the effect of the government's January 10th policy, which greatly eased reconstruction safety inspection regulations, may be limited to some areas with good business potential such as first-generation new towns. Yoon Soo-min, a real estate specialist at NH Nonghyup Bank, explained, “Areas like first-generation new towns, which have a high proportion of large-sized apartments of 30 to 40 pyeong and fewer households, have better profitability and projects can proceed faster. Although regulations such as safety inspections have been eased, the speed of reconstruction will vary greatly depending on business feasibility.”

Seoul City approved the architectural plan for the reconstruction project of Sanggye Jugong Complex 5 at the 15th Architecture Committee meeting. The photo shows Sanggye Jugong Complex 5 in Nowon-gu, Seoul, on the 31st. Photo by Jinhyung Kang aymsdream@