Hanshin Pilot Actual Transaction Price 1.35 Billion → 1.6 Billion
High Asking Price Due to Reconstruction Expectations
Does the Scoring Criteria for the Leading District Include Commercial Consent Rate in Resident Agreement Rate?
"In this neighborhood, there is a prevailing atmosphere that the ‘Sibeom Complex will be selected as a pilot district (leading district).’ Recently, inquiries about purchasing have surged sharply, but homeowners believe prices will rise further, so there are hardly any properties on the market." (Manager of a real estate agency near Hanshin Apartment in Bundang on the 29th of last month)
A banner showing the prior consent rate is hung in the Samsung Hanshin Apartment complex in Siheom-danji, Seohyeon-dong, Bundang-gu, Seongnam-si, Gyeonggi Province. [Photo by Seungwook Park]
Apartment prices in Bundang-gu, Seongnam-si, Gyeonggi Province have risen by up to 250 million KRW in three months, centered around complexes with a high possibility of being selected as leading districts in the first-generation new towns. As the reconstruction prospects are reflected in the prices, homeowners are withdrawing their listings, and asking prices are rising day by day.
Price Increase of 250 Million KRW in Three Months Due to Reconstruction Prospects
According to the Ministry of Land, Infrastructure and Transport’s Real Transaction Price Disclosure System, an 84㎡ unit in the Hanshin Apartment pilot complex in Seohyeon-dong was traded for 1.6 billion KRW on the 3rd of last month. This is 250 million KRW higher than the transaction price of 1.35 billion KRW on March 26 this year. Currently, the asking price for this complex has reached up to 1.65 billion KRW.
A real estate agent working near the complex said, "There is a possibility that the peak price of 1.7 billion KRW will be recovered in the second half of this year," adding, "Prices are rising together due to reconstruction prospects and the upward trend in Seoul’s housing market."
Along with the pilot complex, the Yangji Village complex in Sunae-dong, which is also known to have a high possibility of integrated reconstruction, has seen an increase in sale prices. An 84㎡ unit in the Cheonggu Apartment 2nd Complex in Yangji Village was traded for 1.59 billion KRW on the 7th of last month, up 140 million KRW from 1.45 billion KRW on March 25.
The asking price for this complex is set between 1.75 billion and 1.78 billion KRW. A real estate agent near Sunae-dong said, "Currently, there are only two listings for 84㎡ units in Cheonggu 2nd Complex priced at 1.75 billion KRW and 1.78 billion KRW," adding, "The 1.75 billion KRW unit has a buyer and is under negotiation. It will be contracted soon."
In Yangji Village as well, inquiries from buyers are increasing, but homeowners are withdrawing their listings. He explained, "Just today, two homeowners called to say they will not sell their houses," adding, "They seem to think it will be more profitable to sell later."
A banner indicating the prior consent rate is hung at Cheongsol Gyeryong Apartment on Jeongja-ilro, Geumgok-dong, Bundang-gu, Seongnam-si, Gyeonggi Province. [Photo by Seungwook Park]
Another strong candidate, Cheongsol Fine Yucheon Apartment on Jeongja-ilro, has asking prices far exceeding actual transaction prices. The asking price for an 84㎡ unit in the 2nd Complex of this apartment is 1.55 billion KRW, which is 240 million KRW higher than the actual transaction price of 1.31 billion KRW on May 31. A real estate agent explained, "The 1.55 billion KRW unit is on the 2nd floor, but the homeowner raised the price high due to expectations of reconstruction."
Kim Je-gyeong, director of Toomi Real Estate Consulting, explained, "Residents believe that once their complex is selected as a leading district in November, reconstruction will proceed, and housing prices will rise further," adding, "Therefore, they say not to sell now but to sell later." Kim added, "If the leading district selection does not happen, it is uncertain when reconstruction can proceed, so there is enthusiasm for the leading district selection," and further explained, "Bundang’s leading district has up to 12,000 households, and if this much relocation demand arises, there is concern about a jeonse (long-term lease) crisis, so reconstruction after the leading district will proceed after some time."
Commercial Consent Rate, Previously Excluded from Selection Criteria, Likely to be Included Again
Meanwhile, the ‘commercial consent rate’ has emerged as a controversial issue in the selection criteria for leading districts. Seongnam City is expected to reverse its earlier announcement to exclude the commercial consent rate from the detailed scoring criteria for leading district selection. As the commercial consent rate is likely to be included again in the selection of leading districts, apartment complexes in Bundang are becoming restless.
Typically, when carrying out redevelopment projects, conflicts with commercial establishments often arise, so complexes with many commercial properties were at a disadvantage in raising reconstruction consent rates. Accordingly, apartment complexes with many commercial properties requested Seongnam City to exclude the commercial consent rate when calculating resident consent rates, and Seongnam City accepted this, excluding the commercial consent rate when announcing the leading district selection guidelines on the 26th of last month.
However, since then, there have been repeated criticisms that "certain complexes with a high proportion of commercial properties benefit." For example, Yangji Village, where five complexes are pursuing integrated reconstruction, has about 450 commercial establishments, making it difficult to raise the commercial consent rate, but under the changed criteria, the burden of securing commercial consent rate was greatly reduced. In response to complaints from other complexes that "this is unfair," Seongnam City announced it would revise the guidelines again in less than a week.
A view of a real estate agency office near Sunae-dong, Bundang-gu, Seongnam-si, Gyeonggi Province. Photo by Seungwook Park
Kim Ki-hong, the chief planner (MP) for Bundang New Town redevelopment, stated at the ‘Bundang New Town Leading District Selection Guidelines Resident Briefing’ held at Seongnam City Hall on the 29th of last month, "Given the growing controversy over the commercial consent rate, we plan to review the criteria adjustment." He explained, "If selected as a leading district, the designation of the redevelopment zone must comply with the Urban and Residential Environment Improvement Act’s criteria of ‘consent from more than 75% of landowners and more than 50% per building,’" adding, "Therefore, it is judged that commercial consent must be secured anyway."
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