[Report] Real Estate Buzz in 'Jam, Sam, Dae, Cheong'... Except for Reconstruction

Rising Asking Prices and Fewer Listings After Talk of Easing Regulations
Increased Gap Investment and Purchase Inquiries for Els, Resentz, and Trizium
Short-term Price Surge and Asking Price-Based Transactions Expected

"Properties that hadn't been sold for a while all came off the market last week at once. We are also receiving two to three inquiries about gap investments daily. Whether it's due to expectations that prices might rise, homeowners are raising their asking prices by 50 million won each." (Jamsil-dong A real estate agency)

On the 30th of last month, we visited Jamsil-dong, Songpa-gu, Seoul. Despite it being a weekday afternoon, one or two customers were seated at each real estate agency for consultations. The announcement on the 14th of last month by Seoul Mayor Oh Se-hoon to lift the Land Transaction Permission System (Land Permission System) sparked interest. The so-called ‘Jam·Sam·Dae·Cheong’ areas?Jamsil-dong in Songpa-gu and Samseong-dong, Daechi-dong, Cheongdam-dong in Gangnam-gu?could be included in the Land Permission System lifting target.

Elite Breeze... Reconstruction Still Pending

The phone lines at real estate agencies near the elite apartments in Jamsil-dong?Els, Resentz, Trizium?have been busy for the first time in a while. The head of B real estate agency in Jamsil-dong stated, "Sale prices are rising, listings are decreasing, and customers are increasing." The head of nearby C real estate agency also explained, "Since Mayor Oh Se-hoon announced the review of lifting the Land Permission System, the market situation has definitely improved," adding, "After this Lunar New Year, there is a keen atmosphere watching whether Jamsil-dong will be included in the Land Permission System lifting target."

Els, Resentz, and Trizium apartments in Jamsil-dong, Songpa-gu, Seoul. Photo by Lee Ji-eun

On the other hand, reconstruction complexes appeared calm. The representative reconstruction complexes in Gangnam, which could stimulate the real estate market, seem influenced by expectations that the Land Permission System will be maintained. The head of D real estate agency near Jamsil Jugong 5 Complex said, "Jamsil Jugong 5 Complex has quieted down due to news that the Land Permission System will be maintained." However, he hinted, "If the Land Permission System is lifted and the prices of the elite apartments rise, consultations from homeowners wanting to sell and move into Jamsil Jugong 5 Complex have increased."

The head of E real estate agency near Eunma Apartments in Daechi-dong, Gangnam-gu, said, "Since the news of the Land Permission System review, one to two customers inquire about gap investments daily," but explained, "Currently, there is a severe shortage of listings, and since the Land Permission System might be maintained, everyone is carefully awaiting the next briefing."

Real Demand Concentrates... Prices May Temporarily Rise

Among real estate agents, there is an opinion that if the Land Permission System regulation is lifted, suppressed investment demand may temporarily appear. Until now, Jamsil, Samseong, Daechi, and Cheongdam-dong have been designated under the Land Permission System, making it impossible to purchase for anything other than direct residence or operation purposes, thus gap investments were not possible.

Apparently expecting this, in the case of Els and Resentz apartments in Jamsil-dong, listings are appearing with asking prices more than 50 million won higher than the previous actual transaction prices. A 59㎡ unit (mid-floor) in Jamsil Els apartment was traded at 2.19 billion won in December last year. However, currently, listings on real estate brokerage sites for the same mid-floor size are posted between 2.3 billion and 2.35 billion won. For Resentz apartments, a high-floor 84㎡ unit was traded at 2.615 billion won on the 30th of last year, but now listings range from 2.75 billion won up to nearly 2.9 billion won.

Jamsil-dong Jugong Complex 5, Songpa-gu. Photo by Yonhap News Agency

Experts believe that expectations from lifting the Land Permission System and homeowners withdrawing listings could cause a temporary price increase. However, they also expect an increase in real demand. For reconstruction apartments, polarization is expected depending on the complex and location.

Kim Hyo-seon, Senior Real Estate Specialist at NH Nonghyup Bank, said, "Areas with good school districts that are suitable for actual residence and where prices have risen relatively less due to the Land Permission System have value in terms of scarcity," adding, "In Gangnam, some well-located areas where price increases were relatively small are expected to see transactions mainly based on asking prices."

Yang Ji-young, Senior Consultant of Asset Management Consulting at Shinhan Investment Corp., explained, "In the short term, expectations of lifting the Land Permission System may influence price increases," but added, "For Gangnam reconstruction complexes, price differences exist depending on the progress of the projects, so the impact will vary by location and complex."