Exclusive 29~84㎡ Total 10 Units Up for Bid
Success Uncertain Due to Loan Regulations and Decreased Transaction Volume
Ten reserved units at 'Olympic Park Foreon' in Dunchon-dong, Gangdong-gu, Seoul have entered a bidding process to find owners. The reserved units of this apartment, which began occupancy on the 27th of last month, were listed at prices up to 500 million KRW lower than recent transaction prices for occupancy rights. While the bidding is expected to gain attention as a 'lottery,' experts say it remains to be seen whether competition will be fierce due to recently tightened loan regulations and a sluggish real estate market.
A congratulatory banner for residents is displayed at the entrance of the Olympic Park Foreon complex in Gangdong-gu, Seoul. / Photo by Yonhap News
According to the Public Procurement Service's Nara Market on the 6th, the Olympic Park Foreon association announced on the 4th that it is conducting a sale bidding for the reserved units. The listings include one unit each of exclusive areas 29㎡ and 49㎡, two units of 59㎡, and three units each of 39㎡ and 84㎡, totaling 10 units. The bidding period runs until the 17th, and the successful bidders must sign contracts by the 24th of this month, within six days from the bid opening date (the 18th).
Reserved units refer to quantities left unsold by the reconstruction and redevelopment association, the project implementer, to prepare for cases such as omission or errors in members' shares and potential future lawsuits. These units are sold through a highest-bid auction rather than subscription.
This is the first attempt to sell reserved units at Olympic Park Foreon. The association set the minimum bid price for the 84㎡ units at 2 billion KRW, which is 700 million KRW higher than the average sale price of 1.3 billion KRW. However, since occupancy rights traded in the fourth quarter of this year were in the range of 2.2 to 2.4 billion KRW, the bidding price is lower than the market price.
All 59㎡ units are Type A, with a minimum bid price set at 1.6 billion KRW. Compared to the sale price of around 1 billion KRW, this is about 600 million KRW higher. However, it is more than 300 million KRW lower than the occupancy right price of 1.925 billion KRW traded in October.
For the other sizes, except for the 39㎡ occupancy right which was directly traded at 1.1 billion KRW in October, there have been no recent transactions making price comparison difficult, but all units are listed at prices 300 to 400 million KRW higher than the average sale price.
However, the recent decline in real estate transactions is considered a variable that could affect the success of the reserved unit bidding. If the bidding fails due to poor market conditions and lack of bidders, the minimum bid price may be lowered further. Also, although the bidding price is lower than the market price, experts point out that the actual winning bid price may only save about the brokerage commission compared to typical occupancy right transactions.
Ham Young-jin, head of the Real Estate Research Lab at Woori Bank, said, "Reserved units require full payment at once, so only those with prepared cash can participate," adding, "Since it is a competitive bidding, the winning bid price can exceed the listed price." He continued, "Buyers will consider the market conditions when submitting bids, but it is uncertain whether the sale will be completed in the first round."
Meanwhile, Olympic Park Foreon consists of 85 buildings from three basement floors to 35 above-ground floors, with a total of 12,032 units, making it the largest reconstruction complex since the founding of Korea. Occupancy will be completed by the end of March next year. Although resale restrictions have been lifted, residents must live in the units for at least three years.
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