'Jupjup' Non-Sequential Subscription, Contracting is 'Not Sure'

Even in so-called 'ZupZup' non-priority subscription complexes where a subscription savings account is not required, a process of 'separating the wheat from the chaff' is taking hold. Cases of applicants giving up contracts after subscribing are gradually increasing unless the sale price is judged to be cheap.

Apartment buildings in downtown Seoul / Photo by Yonhap News

According to the Korea Real Estate Board's Subscription Home on the 8th, 'Sangdo Prugio Clavenue' in Sangdo-dong, Dongjak-gu, Seoul, conducted its 5th voluntary supply subscription the day before. The competition rates by exclusive area were ▲74㎡ 29.38:1 (13 units for recruitment, 382 applicants) ▲84㎡A 32.46:1 (24 units for recruitment, 779 applicants) ▲84㎡B 23.50:1 (12 units for recruitment, 282 applicants).

Although the competition rate reached double digits again this time, it does not seem easy to lead to contracts. During the 4th voluntary supply last month, 12 units of exclusive 84㎡B were recruited, and the competition rate was 98.08:1, but no contracts were made. This complex was fully subscribed in the first priority during its initial sale in September last year. The average competition rate was about 14:1. Despite the high subscription competition rate, the high sale price compared to the surrounding market price was a stumbling block. The sale price for exclusive 84㎡ is around 1.2 to 1.3 billion KRW.

There are complexes where the number of voluntary supplies has exceeded 10 times. 'Hwagok The Live Sky' in Hwagok-dong, Gangseo-gu, has attempted to clear remaining units 14 times as of early last month. This small-scale residential-commercial complex with a total of 140 units is located in the middle of Hwagok Central Market and is evaluated as having a less favorable location. It takes about 15 minutes on foot to nearby Hwagok Station on Line 5.

As apartment sale prices have soared, demand for non-priority subscriptions such as voluntary supply has increased, but unless it is a promising project site, it is difficult to proceed to contracts.

As it became difficult to sell out even after several voluntary supplies, some places lowered the contract barriers. 'Jungang Heights Gangdong' in Gildong, Gangdong-gu, which conducted the 7th voluntary supply at the end of last month, offered free balcony expansion. The competition rate ranged from a high of 26.25:1 (exclusive 49㎡K) to a low of 9.33:1 (exclusive 44㎡G). However, since the sale price for exclusive 44㎡ is in the 700 million KRW range, higher than the surrounding market price, whether it will sell out remains uncertain.

Changing contract conditions is not easy considering fairness with existing subscribers who went through formal contracts. A construction company official said, "Temporary condition changes such as lowering the deposit from 10% to 5% are not problematic, but discounts on sale prices or providing free options require consultation with existing subscribers," adding, "Nevertheless, clearing all sale units is the most important thing for construction companies that need to receive construction costs."

Kim Gyu-jung, a real estate specialist at Korea Investment & Securities, said, "In Seoul, where supply shortages are expected within a few years, or in areas where jeonse prices are relatively strong, there may be actual residents who fully utilize the advantages of non-priority subscriptions under the expectation that prices of new complexes will continue to rise," and added, "Careful analysis and judgment are required."