'Bunsangje Grace Period' Bought Time... Gaepo Smiles While Dunchon Cries

Gaepo Jugong 1 Complex and Dunchon Jugong, the Biggest Reconstruction Projects in Seoul, Face Mixed Fortunes
Dunchon Jugong Breathes Sigh of Relief but HUG General Sale Price Negotiations Expected to Be Difficult
Growing Calls Among Some Union Members for Removal of Union Chairman

Dunchon Jugong Apartment Reconstruction Site, Gangdong-gu, Seoul / Photo by Mun Ho-nam munonam@

[Asia Economy Reporter Onyu Lim] The fortunes of Gaepo-dong Jugong 1 Complex in Gangnam-gu and Dunchon-dong Jugong Apartments in Gangdong-gu, considered the largest reconstruction projects in Seoul, are diverging. These two complexes, with construction scales of 6,702 households and 12,032 households respectively, along with Banpo-dong Jugong 1 Complex in Seocho-gu, represent the last large-scale low-rise reconstruction apartments in Seoul. On the surface, both complexes have gained some breathing room in their project schedules as the application of the private land price ceiling system for pre-sale prices has been postponed by three months from the end of this month to the end of July. However, they show clear differences in negotiations with the Housing and Urban Guarantee Corporation (HUG), which has become the biggest variable in the pre-sale schedule.

According to the maintenance industry on the 1st, Gaepo Jugong 1 Complex has completed the demolition of apartments and commercial buildings except for one building that the Seoul Metropolitan Government has decided to preserve as a future cultural heritage. The union plans to file a demolition report with the Gangnam District Office soon and start construction on the 10th. Although the pre-sale originally planned for this month was difficult due to the postponement of the general meeting caused by the COVID-19 pandemic, the union states that there is no major problem in negotiating pre-sale prices with HUG for the issuance of the pre-sale guarantee. The union currently plans to propose a general pre-sale price of 48.5 million KRW per 3.3㎡. This is similar to the 47.5 million KRW per 3.3㎡ recently offered at Gaepo Presidences Xi in the Gaepo district. HUG bases the pricing of apartments in high pre-sale price management areas on 100% of the pre-sale prices of apartments sold within the last year in the area, so industry insiders expect little chance of significant price adjustments. Some suggest that since the complex size is more than twice that of Gaepo Presidences Xi (3,375 households), the pre-sale price could be set higher due to weighting factors.

The situation of Dunchon Jugong is quite the opposite. Although time has been gained due to the postponement of the pre-sale price ceiling system, the gap with HUG in pre-sale price negotiations has not been easily bridged. The union applied for a pre-sale guarantee last month at 35.5 million KRW per 3.3㎡ after failing to find a compromise on the pre-sale price during preliminary consultations with HUG, but this was rejected. This was because the price difference was more than 5 million KRW compared to the approximately 30 million KRW per 3.3㎡ proposed by HUG. A maintenance industry official said, "The official land price of Dunchon Jugong is similar to nearby Songpa-gu complexes, but HUG's excessively low pre-sale price proposal has caused union members to resist," adding, "Both sides have very strong positions, so it is expected to be difficult to reach an agreement even with the postponement of the pre-sale price ceiling system."

The Dunchon Jugong union had planned to hold an emergency delegates' meeting on the 17th of last month to discuss measures such as lowering the pre-sale price and post-sale, but this was canceled due to the spread of COVID-19, limiting their options. Recently, internal conflicts have escalated as residents have demanded the dismissal of the union head amid the pre-sale price controversy. One union member said, "An online cafe acting as an emergency countermeasure committee has already submitted a dismissal agreement," and added, "More active movements are expected in April." A maintenance industry official predicted, "Realistically, the possibility of HUG raising the general pre-sale price for Dunchon Jugong is slim, so it will be difficult to proceed with general pre-sale within the postponement period of the pre-sale price ceiling system."

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