Mixed Results for Reserved Units in Reconstruction Projects... Godeok Lotte Castle Announces Eighth Sale [Real Estate AtoZ]

Announcement for Sale of Three Reserved Units (59㎡ and 122㎡)
Association Lowers Prices Considering Market Value
Reserved Unit Sales Show Mixed Results by Region

The sales performance of reserved units, often considered hidden "lottery" opportunities because they can be purchased below market price, has shown significant variation depending on the region and price.

Godeok Lotte Castle Veneruche complex view. Lotte Construction website.

According to the maintenance industry on May 20, the liquidation committee of the housing reconstruction and maintenance project association for Godeok 7th Complex in Gangdong-gu, Seoul, has begun the eighth round of reserved unit sales for Godeok Lotte Castle Veneruche (formerly Godeok 7th Complex), offering three units. Until May 30, two units of 59 square meters and one unit of 122 square meters will be up for sale. Despite seven previous sale announcements, no buyers have been found. This complex, located at 514 Sangil-dong, Gangdong-gu, consists of 20 buildings with a total of 1,859 units. Residents moved in in December 2019.

The association lowered the minimum bid price compared to the previous announcement in April by 30 million won for the 59㎡ units and 50 million won for the 122㎡ unit. The minimum bid price for this announcement is 1.23 billion won for each 59㎡ unit and 2 billion won for the 122㎡ unit, which is similar to recent transaction prices. For Godeok Lotte Castle Veneruche, the 59㎡ units were recently traded between 1.208 billion and 1.28 billion won last month. All three reserved units announced by the association are currently occupied by tenants with jeonse (long-term rental) contracts. The jeonse deposit is 420 million won for the 59㎡ units and 900 million won for the 122㎡ unit. If a unit is successfully bid on, the buyer must pay the remaining amount after deducting the jeonse deposit. The jeonse contracts are set to expire between late 2026 and early 2027.

There are currently no bidders. A liquidation committee official stated, "No one submitted a bid during the previous announcement, so we lowered the price. However, it's difficult to simply offer the units at a very low price just to sell them quickly, and we believe it is right to offer them at market price." The official added, "There also seems to be a perception in the market that these should be purchased at the same price as initial sales."

This situation contrasts with Maple Xi in Seocho-gu, Seoul, where all 29 reserved units were sold out after just two rounds of bidding on May 13. For the 59㎡ units in this complex, the final sale price was 3.5 billion won, which is 200 million won higher than the minimum bid price set by the association. The 84㎡ units were sold for 4.6 billion won, 100 million won above the association's minimum bid price of 4.5 billion won. For Maple Xi, the right to purchase a 59㎡ unit was traded at a record 3.7 billion won in early March, and the 84㎡ unit reached a record 4.9 billion won on March 23.

Maple Xi in Seocho-gu, Seoul. GS Construction website

In March, all three reserved units at Olympic Park Foreon in Gangdong-gu, Seoul, also found buyers. The three 39㎡ units were successfully bid at an average price of 1.3 billion won, with the highest price reaching 1.35212 billion won. When the association set the minimum bid price at 1.2 billion won at the end of last year, the sale failed, but as the land transaction permit zone was expanded earlier this year and housing prices continued to rise, demand surged.

Park Won-gap, real estate expert at KB Kookmin Bank, explained, "Reserved units are sold at market price, but they are not subject to land transaction permit zone regulations and do not have an obligation for actual residence. Sometimes, auction prices even exceed market value. Recently, demand for reserved units has increased, coinciding with a preference for new, large-scale apartment complexes."

Reserved units refer to homes that the association withholds from general sales. Typically, these can account for up to 1% of the total number of units. The association sets the minimum bid price, and the unit is awarded to the highest bidder. No subscription savings account is required, and anyone can bid regardless of the number of homes they already own.