"Move In Immediately After Winning"... The Secret of New Buildings in Gangnam

Gangnam 3 Districts Subject to Sale Price Ceiling
Sale Delayed Due to Rising Official Land Prices and Construction Costs
Typically 3 Years from Sale to Move-in... Around 1 Year in Gangnam
"Funding Burden"... Applicants Waiting for Subscription Feel the Pressure

"Apartments in the Gangnam area of Seoul feel like you move in immediately after the sale."

As recent rumors circulating in the market suggest, the time between sale and move-in for newly built complexes in the Gangnam area is gradually decreasing. This is the result of reconstruction and redevelopment associations subject to the price ceiling system delaying sales schedules as much as possible to raise sale prices. The associations are taking advantage of the situation where the subscription is completely sold out even if the sales schedule is delayed to the maximum. As the period from sale to move-in shortens, applicants must prepare a huge amount of funds within a short period. Analysts say the barrier to entering new apartments in Gangnam has become even higher.

According to the Korea Real Estate Agency's Subscription Home on the 9th, newly built complexes in the three Gangnam districts (Seocho, Gangnam, Songpa) that were sold last year take less than two years to move in. DH Daechi Edelweiss in Gangnam-gu, sold in October last year, is scheduled for move-in in August this year, taking about 10 months. Cheongdam Le El in Gangnam-gu takes 1 year and 2 months, and Maple Xi in Seocho-gu takes 1 year and 5 months.

This trend is expected to continue this year. Raemian One Perla (Bangbae 6 District) in Seocho-gu, scheduled for sale this month, is set for move-in in November this year. Raemian Trini One (Banpo 3 District), scheduled for move-in in August next year, has not yet set a sales plan. Typically, it takes about three years from sale to move-in, but most of the complexes in Gangnam are effectively being sold close to post-sale (recruiting residents after most of the building is completed).

There is an analysis that the associations are intentionally delaying schedules to raise sale prices. From the association's perspective, as land costs and construction costs that determine sale prices rise every year, waiting allows them to increase sale prices. In Gangnam, where the price ceiling system applies, sale prices are set by adding the land cost appraised based on the publicly announced land price and the basic construction cost announced by the Ministry of Land, Infrastructure and Transport. Both the publicly announced land price and the basic construction cost are expected to rise this year as well. A representative of a Gangnam association said, "Our goal is to get the highest possible sale price," adding, "This is to cover the increase in construction costs and reduce the burden on association members."

Sale prices in the three Gangnam districts continue to rise as the associations wish. Raemian One Perla, the first complex to be sold in Gangnam this year, was priced at 68.33 million KRW per 3.3㎡, setting the highest sale price in Bangbae-dong. The sale price of Acro Ritz County, sold last month in the same neighborhood, was 66.66 million KRW per 3.3㎡. This is an increase of 1.67 million KRW per 3.3㎡ in just one month. Despite soaring sale prices, subscription enthusiasm remains strong. DH Daechi Edelweiss, with a period of only 10 months from sale to move-in, recorded an average competition rate of 1025 to 1, the highest ever in Seoul. A construction industry official said, "Even if sale prices rise, subscriptions flood in because the location is prime and prices are lower than surrounding house prices," adding, "Delaying the sale timing is possible because they are confident it will sell out no matter when or at what price it is offered."

This delay strategy is becoming a burden for applicants. They have to pay more expensive sale prices and prepare funds such as interim and final payments within a short period. An industry official pointed out, "Typically, it takes about three years from sale to move-in, but recently, Gangnam complexes require applicants to prepare all sale payments within a year," adding, "This makes the original purpose of the pre-sale system, which lowers financial burden through installment payments, meaningless." Yoon Ji-hae, senior researcher at Real Estate R114, said, "From the buyer's perspective, it is now necessary to thoroughly plan fund procurement from the time of subscription."