Top Developer's Downfall: DS Networks Files for Court Receivership [Real Estate AtoZ]

No. 1 in Sales from 2020 to 2022, but Posted 160.3 Billion Won Operating Loss Last Year
Asset Sales Including Pyeongtaek Brain City and the Korea Securities Depository Site in Ilsan Not Enough to Stem Losses
Number of Domestic Developers Plummet

DS Networks, recognized as one of South Korea's top three real estate developers, has filed for court receivership (corporate rehabilitation proceedings). As the real estate market slumps and a liquidity crisis unfolds, a sense of crisis is intensifying across the entire developer industry.

According to the construction industry on September 28, DS Networks applied for a "hybrid restructuring procedure" at the Seoul Bankruptcy Court on September 26. This procedure combines the court's rehabilitation system with a workout process led by creditor financial institutions. Through the court's comprehensive stay order, provisional seizures or compulsory executions by non-financial creditors are temporarily suspended, while the financial creditor group and the company can autonomously negotiate and formulate a debt restructuring plan.

DS Networks is considered one of the top three developers in South Korea, alongside MDM and Shinyoung. In particular, it was the industry leader in revenue for three consecutive years from 2020 to 2022. However, despite achieving 745 billion won in sales last year, the company posted an operating loss of 160.3 billion won and a net loss of 333 billion won, turning to a deficit.

After aggressively acquiring land during the real estate boom of 2020 to 2021, the market, especially in regional areas, rapidly declined, accelerating the liquidity crisis. DS Networks has since moved to reorganize its assets by selling subsidiaries such as DSN Investment, DS Networks Asset Management, and DS Investment & Securities, as well as disposing of land in Pyeongtaek Brain City and the Korea Securities Depository site in Ilsan.

DS Networks is currently developing multiple projects, including a mixed-use residential and commercial complex in Dalseo-gu, Daegu, and the SK Leaders View at Gangdong Station in Seoul. Although these projects do not have presale guarantees from the Housing and Urban Guarantee Corporation (HUG), they are being constructed under a builder completion guarantee system, so there is no expected harm to buyers.

DS Networks' application for court receivership symbolizes a crisis for the entire developer sector. According to the Ministry of Land, Infrastructure and Transport, the number of newly registered real estate development companies plummeted from 404 in 2022 to 171 in 2024. Meanwhile, 115 companies closed in the first half of this year alone. The total number of development companies fell from 2,715 at the end of 2022 to 2,408 in 2024. This downward trend is expected to continue this year.