[Report] Visiting Gangnam Area with 'Transaction Permission'... "Already an Asset Owner's League After Loan Regulations"

After the June 17 Measures, Gangnam Area Mostly Quiet... Some Predict 'Balloon Effect Within Gangnam'
"Besides areas that have already risen significantly due to development benefits, look at Apgujeong and Banpo"

[Asia Economy Reporters Yuri Kim and Donghyun Choi] "Properties that were going to be sold before the ownership tax reference date (June 1) have already been sold. Recently, it's rather quiet. Even though the area has been designated as a land transaction permission zone, many people believe the prices will rise anyway." (Seoul Jamsil-dong, Real Estate Agent A)

On the 17th, when the government announced comprehensive additional real estate measures, the Gangnam area of Seoul was visited. Following the government's announcement, Seoul City designated a total of 14.4㎢ including the International Exchange Complex District in Gangnam-gu's Samseong, Cheongdam, and Daechi-dong, as well as Jamsil-dong in Songpa-gu, as land transaction permission zones. However, in this area, there seemed to be little significance attached to the overlapping regulations on top of existing restrictions. Since the December 16th measures last year, which included a complete ban on mortgage loans for apartments priced over 1.5 billion KRW, it has already become a league for wealthy cash-rich investors, and most of the urgent sales to avoid taxes have already been exhausted. Due to more than 20 real estate measures targeting the Gangnam area, there is a strong perception of 'prices will rise again anyway.'

A representative from real estate agent B in Jamsil-dong said, "The effect of the land transaction permission zone will take effect immediately from the 23rd, so there are not many related inquiries," adding, "Summer is also an off-season for real estate, and there are not many listings." A nearby real estate agent C said, "Urgent sales to avoid ownership tax were mostly exhausted with payment conditions by the end of May," and "Although media reports about this area being designated as a land transaction permission zone came out earlier this month, there were not many related inquiries."

In the case of Els and Rescence, representative large apartment complexes in Jamsil, several gap investments have been traded recently. For Els 84㎡ (exclusive area), the price rose from 1.83 billion KRW last month to 2 billion KRW on the 2nd of this month. The current asking price exceeds 2.1 billion KRW. According to local real estate agents, the area is bustling as the private investment feasibility study for Jamsil MICE (Meetings, Incentives, Conferences, and Exhibitions) has been completed recently, and the Global Business Center (GBC) in Samseong-dong has started construction. They expect gap investments to decrease once the land transaction permission zone designation takes effect on the 23rd, requiring approval from the district office chief when acquiring houses with land area exceeding 18㎡ and a two-year residency requirement.

However, in the case of Jamsil Jugong 5th Complex, considered a leading reconstruction site nearby, the gap investment demand was low due to the significantly lower jeonse (long-term deposit lease) price compared to the sale price. Since the asking price is about 2.2 billion KRW for 82㎡, and investments are mainly by cash-rich buyers from the start, the dominant opinion was that government regulations would have little impact.

The new government regulations also raised the possibility of new demand. For example, Rescence 27㎡, priced around 1 billion KRW, has a land area of 13㎡, so it is not subject to the new regulations. Gap investment demand might concentrate on such small-sized houses. Also, there were quite a few cases where tenants asked landlords to sell the house cheaply before the regulations applied, exploiting investors' reluctance to meet the residency requirements.

The atmosphere in Samseong-dong was similar. The head of real estate agent D said, "Apartments in this area have become so large that cash-rich buyers who are not concerned about the measures approach them," adding, "Although the designation will certainly tighten regulations, about half of the demand will consider actual residence later due to tax issues, so they will not be greatly affected." The head of real estate agent E also said, "About 10% of inquiries come from outside the capital area, mostly from Seoul asset owners, with about half for actual residence and half for investment purposes," adding, "Even recently, when the real estate market was said to be reviving, there were not many sales inquiries, and only occasional transactions occurred, so the atmosphere is expected to be similar."

The head of real estate agent F in Daechi-dong raised his voice, saying that this measure would rather hit the real demand from ordinary citizens hard. He said, "Now, even if major measures come out, there are no inquiries in this area. Since the ban on loans over 1.5 billion KRW, people who can finance tens of billions in cash even with leases buy here," adding, "This measure, which essentially freezes demand, will rather cause side effects by hitting the real demand from ordinary citizens hard."

In the Apgujeong area, there was an expectation of a 'balloon effect within Gangnam.' The head of real estate agent G in Apgujeong said, "Demand from outside the capital area is steady but not large in proportion. Many cases are based on actual residence," adding, "The areas designated this time have already risen significantly due to development prospects, and with this regulation, investment demand is likely to turn to Apgujeong or Banpo areas."

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