Buying Rural Land Appraised at 14 Million Won for 1.7 Billion Won... Why Invest 117 Times More? [Real Estate AtoZ]

Initial Appraised Value: 14.52 Million Won
Winning Bid Reaches 1.7 Billion Won... Bid Rate Surges to 11,770%
Public Project Planned Near the Site
High Likelihood of Land Compensation Auction

Approximately 600 pyeong of forest land in Jincheon-gun, North Chungcheong Province, was sold at auction for 117 times its appraised value. In terms of auction price ratio, it reached 11,700%. Analysts attribute this to investment aimed at land compensation.

According to the auction industry on December 15, a 665.8-pyeong (2,198 square meters) forest land in Yeondam-ri, Chopyeong-myeon, Jincheon-gun, was put up for auction at Cheongju District Court Auction Division 1 on December 2. A total of six parcels were bundled together for the auction according to the registry. The lot included forest land adjacent to an existing road as well as some landlocked parcels. An existing road, in this context, refers to land that is not officially classified as a road on cadastral maps but has been used by local residents as a passageway for an extended period.

A 665.8-pyeong forest land in Yeondam-ri, Chopyeong-myeon, Jincheon-gun, listed on the auction of Cheongchu District Court Auction Division 1 on the 2nd. Photo by Gigi Auction

The initial appraised value of the property was 14,529,400 won. Two bidders participated, and the land was sold for 1.7 billion won, which is 11,700.41% of the appraised value. The second highest bid was 1.453 billion won, which also represents an auction price ratio exceeding 10,000%.

The main reason cited for such a high winning bid is the potential for land compensation. Currently, the Geumgang Basin Environmental Office is carrying out a river maintenance project in the area, investing 33.9 billion won, and land compensation is underway. Part of the auctioned land has reportedly been included as compensation targets. For the remaining parcels not yet included, the Central Land Expropriation Committee is reviewing whether they are eligible for purchase requests.

In the auction industry, the practice of acquiring land at auction that is slated for public projects and later earning a profit by receiving compensation from the project operator is called a "land compensation auction." Investors analyze the likelihood of public project inclusion based on appraisal reports and estimate future compensation payments to target potential gains.

However, it is risky to enter such auctions without accurately predicting compensation prices in advance. Kang Eunhyun, Director of the Auction Research Institute at Myungdo Law Firm, stated, "In land compensation auctions, it is crucial to check the compensation prices of neighboring parcels through brokers and use that as a reference for bidding. If the auction takes place during the land expropriation process and it is difficult to assess the compensation price, making a hasty bid is dangerous."

Meanwhile, the highest auction price ratio ever recorded occurred in 2009 at the Ulsan District Court, when a 25-pyeong apartment in Daeam Parkland, Buk-gu, Ulsan, was put up for auction after one failed attempt at a reserve price of 68 million won and was sold for 733 billion won. This resulted in a price ratio of 862,352.94%. However, this was not due to an investor seeking a windfall; it was simply a clerical error in entering the bid amount, and the bidder requested 'sale disapproval,' resulting in the auction being canceled.