"We believed we could actually live here and bought the units, but now we're facing bankruptcy. Please, save us."
On the 5th, buyers of the lifestyle accommodation facility (Saengsuk) Hillstate Changwon Central held a press conference at the entrance to the construction site in Sangnam-dong, Seongsan-gu, Changwon, Gyeongnam, and shouted these words.
The Hillsstate Changwon Central Buyers Association is holding a press conference urging the change of use to residential lodging facilities. Photo by Lee Seryoung
Hillstate Changwon Central is a lifestyle accommodation facility with 6 basement floors and 46 above-ground floors, positioned as a hybrid between a hotel and an officetel.
The developer is MIK Development, and the builder is Hyundai Engineering. Sales began in December 2021, with completion scheduled for October 2025.
According to the Building Act, it is classified as a commercial building, so residential use is not permitted. However, both short- and long-term stays, as well as cooking and laundry, are allowed, and there are no resale restrictions or other regulations. This led to immense popularity during the real estate boom of 2020-2021.
However, in October 2021, to quell controversy over special treatment for Saengsuk, an amendment to the Building Act Enforcement Decree made it mandatory to register such facilities as accommodation businesses. Failure to do so results in an annual enforcement fine equal to 10% of the publicly announced price and other fees.
Promotional bulletin board inside the Hillstate Changwon Central model house. [Photo by Hillstate Changwon Central Subbuyer Association]
Buyers of Hillstate Changwon Central claim they were informed at the time of sale that the units could be used as residences, and encountered the same information in related advertisements.
They said, "Even though sales began in December 2021, after the law was amended, we received no explanation at the time of contract. We were only told that actual residence and resident registration would be possible."
They added, "We were told that if we went through the management company, buyers could live there or rent out the units, which is why we bought when prices were 700 or 800 million won. We never heard anything about having to pay an enforcement fine."
They also said, "We were told there would be no issue with living there, just like at Busan LCT Signiel, so we signed. We were encouraged to buy with the assurance that we could just move in if necessary, but now they're acting like it's not their problem."
The buyers lamented, "If we had been clearly told that residential use was not allowed, we would not have signed the contract. It's not just one or two people?countless people have been deceived in a massive scam."
The association stated, "At a meeting on July 23 attended by Changwon City, the developer, the architect, buyers, and city council members, the developer claimed the sales company acted independently and drew a line. But aren't the developer and sales company essentially one and the same?"
They further said, "At the time of sale, we were told bank loans would cover 70-80% of the sale price, but since Saengsuk is classified as a high-risk asset, actual loans only cover 30-40% of the appraised value. If the residential issue is not resolved by completion next year, we won't be able to pay the balance and will go bankrupt."
They also expressed concern, saying, "If the situation isn't resolved, someone might become so distressed that they make an extreme choice."
The buyers are urging that the facility's use be changed to officetel or mixed-use residential apartment to allow actual residence. At the same time, they noted that such a change is realistically difficult.
To change the use, 100% of buyers must agree, and additional requirements such as increased parking and fire safety facilities, as well as a donation of 15% of the land value, must be met.
In the case of mixed-use residential, even if all buyers agree, contracts must be canceled and sales restarted from scratch, making the prospect of current buyers moving in uncertain.
Even if they try to change to officetel, with completion scheduled for October next year, the building design for parking and other facilities would need to be altered, placing a significant burden on the developer.
The Hillsstate Changwon Central Pre-sale Buyers Association is performing an act depicting pre-sale buyers being caught in the middle between the developer and the sales company. [Photo by Lee Seryoung]
Park Mijun, head of the association, said, "About 180 people have joined the buyers' group chat created in December 2022, but we don't even know where around 100 buyers are."
"We need to find those people to even attempt the 100% agreement required for a change of use, but we can't because we don't have their contact information. Unless the developer, who has the contact information, helps, a change of use is virtually impossible," she said, requesting, "MIK Development and Changwon City must actively step in to resolve the issue."
An official from Changwon City stated, "With the district unit plan revised in January this year, it is now possible to change the use to officetel in this area. If the requirements are met, a change of use can certainly be pursued."
© The Asia Business Daily(www.asiae.co.kr). All rights reserved.
