Since 2020, Kumho and Hyundai Have Entered the Market
High Sales Rates Despite Internal and External Challenges
Expansion into Outlying Cities Seen as a Strategy to Overcome the Downturn
Reflecting Local Characteristics of Combined Fisheries and Agriculture
Exterior view of Yeonggwang Hyundai Hillstate Apartments, which began occupancy last year. Provided by Yeonggwang County
Amid the ongoing downturn in the construction market, the Gwangju and Jeonnam regions are experiencing a surge in unsold apartment units, yet the recent entry of major construction companies into Yeonggwang-gun, Jeonnam, over the past few years has drawn significant public attention. This is considered a highly unusual phenomenon, given that Yeonggwang-gun is a county-level area with a relatively small population among the 22 cities and counties in Jeonnam. The high sales rates of these new apartments make the situation even more noteworthy.
According to Yeonggwang-gun on the 10th, since 2020, two nationwide top-tier apartment complexes?Kumho Eoullim (Kumho Construction) and Hyundai Hillstate (Hyundai Construction)?have been established one after another. The entry of such major apartment complexes into Yeonggwang-gun is virtually unprecedented since the 1990s, when apartment construction began in earnest in the region (at that time, Kumho Construction built an apartment complex with fewer than 100 units).
Despite the adverse conditions of the economic downturn, both projects have reported impressive sales results. Kumho Eoullim, completed in December 2021, consists of five buildings with a total of 278 units and achieved a 100% sales rate, reportedly selling out completely. Hyundai Hillstate, which began occupancy in earnest in October last year and has 493 units, is currently recording a sales rate of 60-70%. In the construction industry, a 60% sales rate is generally considered the break-even point, so these results are seen as a success. The average selling price for both complexes, based on an exclusive area of approximately 84 square meters (about 30 pyeong), is reported to be between 330 million and 380 million won.
Given that Yeonggwang-gun is a small city, these are by no means low prices, yet sales have been relatively smooth. Compared to the nearby major city of Gwangju, the number of units and scale may seem small, which could lead to an underestimation of the sales rates for these two apartment complexes. Some observers view this simply as a trend of construction companies expanding into suburban areas as a countermeasure to the sluggish construction market.
However, even taking these factors into account, the entry of top-tier apartments into Yeonggwang-gun, which has a population of only about 52,000, and their high sales rates are considered highly significant. Without guaranteed profitability, these projects would not have attracted the interest of major construction companies.
This is especially true given the recent increase in unsold units nationwide. According to data released by the Ministry of Land, Infrastructure and Transport at the end of November, the number of unsold units after completion, classified as "malicious unsold units," reached 18,644 nationwide, the highest in four years and four months. In the Jeonnam region, the number of such unsold units after completion was the highest in the country at 2,452. This figure more than doubled compared to the end of last year (1,212 units).
Despite these adverse conditions, the successful sales rates of top-tier apartments in Yeonggwang-gun are seen as the result of unique local characteristics. In fact, Yeonggwang is known for its well-developed fisheries industry along the Chilsan Sea and is called the "City of Four Whites" (rice, salt, silkworm cocoons, and snow) due to its large agricultural sector. The proportion of households engaged in both agriculture and fisheries is relatively high, so it is common for a single household to own two or three houses, according to Yeonggwang-gun officials. Because residents' living areas change significantly with the seasons, it is routine for them to change residences accordingly.
If the general standard of one household owning one home is applied, the effective population of Yeonggwang-gun could be interpreted as well over 100,000. For major construction companies, these characteristics make Yeonggwang-gun an attractive market, as it allows for low-cost, high-efficiency operations. Recently, there have also been reports that another nationwide top-tier construction company, D Construction, is planning to build apartments in Yeonggwang-gun for similar reasons.
An official from Yeonggwang-gun stated, "If you look only at the population numbers, Yeonggwang may seem like a small city," but added, "Since the region's production infrastructure is divided between fisheries and agriculture, the residential patterns here are different from those in other cities. It is common for members of a single household to be spread out and own multiple homes."
The official continued, "Even though they are not top-tier apartments, small and medium-sized brand apartments also tend to sell well. As the unique characteristics of the region have recently come to light, it is true that nationwide construction companies are paying more attention to Yeonggwang-gun."
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