Kyungsillyeon "SH Gongsa Gains 960 Billion Won Profit from Wirye New Town Development"

SH Gongsa Sale Price per Pyeong is 19.81 Million Won
Kyungsillyeon Claims Appropriate Sale Cost is 12.5 Million Won

[Asia Economy Reporter Lim On-yu] Claims have emerged that the Seoul Metropolitan Government and Seoul Housing and Communities Corporation (SH Corporation) have pocketed 960 billion KRW in development profits from land sales and apartment pre-sales in Wirye New Town.

The Citizens' Coalition for Economic Justice (CCEJ) held a press conference at the CCEJ auditorium on the 14th to announce this. Earlier, on the 19th of last month, the Seoul Metropolitan Government and SH Corporation announced the recruitment of residents for 1,676 pre-sale housing units in blocks A1-5 and A1-12 of Wirye New Town in Songpa-gu, Seoul. The pre-sale price ceiling system is applied, with an average pre-sale price of 19.81 million KRW per pyeong, expected to be sold at around 600 million KRW for a 30-pyeong unit.

However, CCEJ argued that considering the land development cost and construction expenses, the appropriate pre-sale price should be 12.5 million KRW per pyeong, and pointed out that the Seoul Metropolitan Government and SH Corporation sold the land and apartments at inflated prices to gain unfair profits.

A CCEJ official explained, based on information disclosure data and their own analysis, "SH Corporation has sold 62,000 pyeong so far at an average of 20.7 million KRW per pyeong," adding, "Compared to the land development cost of 11.3 million KRW per pyeong, this is 9.4 million KRW more expensive per pyeong, resulting in an estimated total land sale profit of 586 billion KRW."

They also pointed out that when the Korea Land and Housing Corporation (LH Corporation) first pre-sold in Wirye New Town in December 2011, the pre-sale price was 11.56 million KRW per pyeong, but the recent SH Corporation pre-sale price (19.81 million KRW per pyeong) has doubled compared to LH's initial price.

CCEJ criticized, "SH Corporation profited not only from land sales but also from apartment pre-sales. According to the pre-sale prices disclosed by SH Corporation, the difference is 7.31 million KRW per pyeong, with an estimated total difference of 372 billion KRW, which means a pre-sale profit of 220 million KRW per household." They added, "Even after deducting the cost of building rental housing, a development profit of 380 billion KRW is expected."

CCEJ emphasized that the same principle should apply to Wirye New Town, following the promise made by the late former Seoul Mayor Park Won-soon to stop public land sales and only pre-sell buildings.

A CCEJ official stated, "If the public sector directly develops the land, retains ownership of the land, and only pre-sells the buildings, supply can be provided at less than 200 million KRW for a 30-pyeong unit," adding, "Pre-selling buildings only blocks unearned income and provides affordable housing supply, enabling non-homeowners to own homes and eliminating the existing housing price bubble."

In response, SH Corporation stated, "We calculate the pre-sale price by accounting for minimal profits within the scope of the pre-sale price ceiling system, and we believe it is desirable for the public sector to recover profits and return them for public benefit rather than some profits going to individual pre-buyers."

They added, "We are running an annual deficit of 350 billion KRW due to rental projects for public interest," and said, "We will provide explanatory materials regarding CCEJ's claims within this week."

CCEJ also criticized government policies aimed at stabilizing housing prices through supply expansion measures such as new town development and public redevelopment. CCEJ urged, "The government should immediately halt the development of the 3rd phase new towns and declare a suspension of sales of multi-family housing sites."

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