'Gangnam Reconstruction Big Fish' Gaepo Jugong 1 Complex Avoids Sale Price Ceiling System

Passed Seoul City Excavation Review
Construction Start Report Filed for General Sale, Only HUG Sales Guarantee Remaining
Union Members' General Meeting Scheduled for 28th
3-Month Extension of Sale Price System Exemption
Reduced Tradable Units After Construction Start Boost Active Transactions

Before demolition, Gaepo Jugong Complex 1, Gangnam-gu, Seoul (Asia Economy DB)

[Asia Economy Reporter Onyu Lim] The Gaepo-dong Jugong 1 Complex in Gangnam-gu, Seoul, which is considered one of the largest reconstruction complexes in the Gangnam area this year with a total of about 6,700 households, is expected to proceed with pre-sale while avoiding the price ceiling system. Recently passing the excavation review, the industry expects that the construction notification and pre-sale guarantee can be completed before the end of the price ceiling system exemption period at the end of July.

According to Gangnam-gu Office and the maintenance industry on the 22nd, the Gaepo Jugong 1 Complex recently passed the excavation review by the Seoul Metropolitan Government's Architecture Committee. The excavation review is a procedure to prevent road subsidence and poor design that may occur during excavation work before construction begins. A maintenance industry official explained, "Many reconstruction associations are struggling due to being held up by the excavation review, but Gaepo Jugong 1 Complex quickly completed this procedure with the support of the Seoul City Maintenance Project Task Force (TF)."

The cancellation of the building register within the complex was also completed on the 17th, about 10 days earlier than initially expected. With the buildings of Gaepo Jugong 1 Complex demolished, the association members only need to pay property tax on the land portion this year.

Gaepo Jugong 1 Complex is a mammoth complex with a total of 6,702 households. During the project promotion process, there was a possibility of applying the price ceiling system due to conflicts with commercial property owners. However, the government extended the exemption period of the price ceiling system by three months due to the impact of the novel coronavirus disease (COVID-19), which became beneficial.

Currently, the remaining procedures before the public announcement for general sale are the construction notification and the pre-sale guarantee from the Housing and Urban Guarantee Corporation (HUG). The association plans to file the construction notification within this month, and they expect no major issues with HUG's pre-sale guarantee. It is known that the association will propose a general sale price of 48.5 million KRW per 3.3㎡ to HUG. This amount differs by only 1 million KRW from the recently sold Gaepo Presidents Xi in the Gaepo district, which was priced at 47.5 million KRW per 3.3㎡. The association is reported to hold a general meeting on the 28th to change the management disposition plan for this purpose.

As the project gains momentum, transactions are also active. According to the Ministry of Land, Infrastructure and Transport's actual transaction price inquiry system, eight transactions were reported last month and three transactions so far this month for this complex. Considering that the actual transaction reporting deadline is within 30 days after the contract, the actual number of transactions is estimated to be higher. This contrasts with other apartments in the Gangnam area, which are experiencing a severe transaction cliff. The frequent transactions are also believed to be influenced by the fact that after construction begins, only properties owned by association members who have held them for more than 10 years and lived in them for more than 5 years can be traded.

However, prices are on a downward trend. For the apartment with an exclusive area of 49.56㎡, it was traded at 2.35 billion KRW last month, but this month it was traded at 1.95 billion KRW, a drop of 400 million KRW. The 42.55㎡ unit was recently contracted at 1.84 billion KRW, down 180 million KRW compared to two months ago.

A nearby real estate agent said, "In a stagnant real estate market, as construction approaches, urgent sale properties are accumulating," adding, "It is difficult to make direct comparisons due to different allocated unit sizes and refund conditions, but the market price seems to have slightly declined."

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