"Avoiding Occupancy Regulations: Accelerated Formation of Reconstruction Associations in Gangnam Area"

Only Residents Living for Over 2 Years Eligible for Move-in Rights... Exemption Applies if Association Approval Applied This Year
Gaepo Jugong 5, 6, 7 Complexes General Meeting Scheduled... Nearby Area Sales Record Continues to Rise

[Asia Economy Reporter Donghyun Choi] Reconstruction complexes in the Gangnam area of Seoul are rushing to obtain approval for the establishment of their associations one after another. The government announced that it will amend the Urban and Residential Environment Improvement Act within the year to grant new apartment move-in rights only to association members who have resided in speculative overheated districts such as Seoul and the metropolitan area for more than two years, prompting active moves to evade the regulations. Complexes that apply for association approval by the end of this year, when the related law is amended, will be exempt from the new rules.

According to industry sources on the 29th, Jugong 5 Complex in Gaepo-dong, Gangnam-gu recently held a steering committee meeting and decided to hold a general meeting for the establishment of the association on October 24. Jugong 6 and 7 Complexes, which are undergoing integrated reconstruction, also plan to hold their association establishment general meetings on November 14. These complexes are known to have already secured the 75% resident consent rate required for association establishment, so there are expected to be no major issues in forming the associations.

As the projects accelerate, prices are hitting new record highs every day. The 83㎡ (exclusive area) unit in Jugong 5 Complex was sold for 2.3 billion KRW on the 1st of this month, marking the highest price ever for the same area. The 83㎡ unit in Jugong 6 Complex and the 60㎡ unit in Jugong 7 Complex also broke their record prices this month, trading at 2.2 billion KRW and 1.85 billion KRW respectively.

Sinbanpo 2nd Complex in Jamwon-dong, Seocho-gu is also preparing for its association establishment general meeting on October 13. Although the steering committee was approved in September 2003, the project had been stagnant due to low resident consent rates. However, recently, within just half a month of collecting consent forms, the complex secured the necessary consent rate for association establishment, picking up speed belatedly. Reconstruction complexes around Apgujeong-dong, Gangnam-gu are also busy working towards association establishment. Apgujeong 5 District (Hanyang 1st and 2nd Complexes), which is progressing the fastest, has secured an 80% resident consent rate, and Apgujeong 4 District (Hyundai 8th Complex, Hanyang 3rd, 4th, and 6th Complexes) has also obtained over 75% resident consent. Apgujeong 1 District (Miseong 1st and 2nd Complexes), 2 District (Shinhyundai, Hyundai 9th, 11th, and 12th Complexes), and 3 District (Old Hyundai, Hyundai 1st to 7th, 10th, 13th, and 14th Complexes) are actively working to increase their consent rates.

Hanyang 2nd Complex in Songpa-dong, Songpa-gu recently held its association founding general meeting and completed the formation of its executive committee. It plans to submit the association approval application to Songpa District Office as early as this week. The current consent rate is reported to be around 88%. This marks the establishment of the association 10 years after the steering committee approval in 2010.

However, some voices express concerns about side effects arising from rushing the related procedures. In fact, ahead of the reimplementation of the excess profit recovery system in January 2018, some complexes hastily applied for management disposition plan approval only to have it canceled, leading to lawsuits among residents. In one reconstruction project, an attempt to sell all general sale units at once to evade the price ceiling system faced strong opposition from local governments. An industry insider explained, "Each regulation introduced by the government is so strong that whether or not the regulations are evaded can affect the entire complex's value by hundreds of billions of won. Various side effects arising from reckless project promotion are also a concern."

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