"New Town Association Formation Accelerates to Avoid Sunset Clause"

Approval of Association Establishment for Singil 2 District Promotion Committee After 13 Years... Last Chance to Ride Sunset Clause Extension

Analysis Points to the Brilliant Success of Singil New Town
High Competition Rate for The Sharp Park Prestige... Raemian Estium Also Hits Record High Prices

Residents Rush to Establish Associations Following Judgment That Redevelopment Will Be Difficult After the 2nd
Successive Establishments in New Towns and Nearby Areas Such as Mia, Jangwi, and Gireum

[Asia Economy Reporter Lee Chun-hee] On the 2nd, when the 'Sunset Clause for Redevelopment Projects' was implemented, New Town and nearby redevelopment sites succeeded in avoiding the sunset clause by establishing associations. It is analyzed that a kind of 'learning effect' occurred, where residents who directly witnessed the improved residential conditions in the area took an active stance.

According to the industry on the 6th, Yeongdeungpo District Office approved the establishment application of the Shingil 2 District Housing Redevelopment Association on the 4th. It has been 13 years since the promotion committee first received approval in 2007.

Shingil 2 District is a project supplying 1,772 apartment units (315 rental units) on 116,896㎡ around 190 Shingil-dong, Yeongdeungpo-gu, Seoul. The association stated, "We plan to increase the project scale to 2,213 units by applying a floor area ratio of up to 250%."

Shingil 2 District is the first case to receive approval for association establishment after the implementation of the redevelopment area sunset clause. The Urban and Residential Environment Improvement Act (Urban Improvement Act), enacted in 2016, stipulated that if the redevelopment or reconstruction promotion committee does not apply for association establishment approval by the day two years after the promotion committee's approval date, the redevelopment area must be canceled.

This is the so-called 'Sunset Clause for Redevelopment Projects.' However, the application of the sunset clause was deferred until March 2, 2020, only for previously designated redevelopment areas.

Shingil 2 District first received promotion committee approval in 2007, but redevelopment was halted due to the aftermath of the global financial crisis the following year. It inevitably became subject to the sunset clause implemented in 2016. However, the promotion committee was reorganized in November 2018, and after collecting consent forms, it succeeded in holding the association founding general meeting in January, successfully boarding the last train of the sunset clause deferral.

▲ A bird's-eye view of the redevelopment project in Shingil 2 District, Yeongdeungpo-gu, Seoul.

The industry analyzes that the revival of Shingil 2 District was influenced by the recent rise in housing prices and the spectacular success of Shingil New Town. Shingil New Town, located less than 1 km from Shingil 2 District, has seen a significant improvement in residential environment since the 11th district's 'Raemian Prevenue' began occupancy in 2015. In December last year, the 3rd district's 'The Sharp Park Prestige' attracted over 20,000 applicants for 187 general sale units, recording a high average competition rate of 114 to 1.

Prices also showed a steep upward trend. The 85㎡ (exclusive area) unit of 'Raemian Estium' in this area was traded at 1.4 billion KRW in December last year, setting the highest price for the same area in the district. However, the upward trend has somewhat slowed since the December 16 real estate measures.

As the adjacent living area showed significant changes and local residents realized the effects of redevelopment projects, the prospect that redevelopment promotion would be difficult after March 2 seems to have given momentum to residents' efforts to establish associations. In fact, many New Town districts or nearby redevelopment sites that chose the 'direct approach' of establishing associations before the 2nd, rather than relying on uncertain extensions of the deferral period to avoid the sunset clause, were included in these redevelopment sites aiming for this 'learning effect.'

Mia 4-1 Housing Reconstruction and 9-2 Housing Reconstruction districts are representative examples. Like Shingil 2 District, these two districts are redevelopment sites near New Town, located about 1 km from Mia New Town. Mia 4-1 District and Mia 9-2 District held association founding general meetings on the 1st and 15th of last month, respectively, and applied for association establishment approval on the 24th and 26th. A promotion committee official from Mia 9-2 District analyzed, "As the application of the sunset clause approached, owners actively participated."

In addition, Jangwi New Town 3rd District received association establishment approval in May last year, followed by Gireum New Town 5th District successfully establishing an association, escaping the sunset clause in advance. Cheongnyangni 6th District near Jeonnong Dapsimni New Town also received association establishment approval in July last year.

This content was produced with the assistance of AI translation services.