"Private Sector Over Public" Reconstruction Expectations Drive Apgujeong and Mokdong to Record Highs

Seoul Prime Location Reconstruction Complex Values Soar... Record Highs Continue
Hyundai 1st Phase 196㎡ at 6.3 Billion KRW, 1.15 Billion KRW Above Previous Peak
New Hyundai 12th Phase 182㎡ Traded at 5.75 Billion KRW, Up 1.2 Billion KRW
Mokdong New Town 1st Complex 91㎡ & 2nd Complex 97㎡ Also Exceed 2 Billion KRW

A view of Hanyang Apartment in Apgujeong 4 District, Gangnam-gu, Seoul, where the first reconstruction association was established (Photo by Ryu Taemin)

[Asia Economy Reporter Ryu Tae-min] "There is great distrust toward public reconstruction, and with reconstruction associations being established, investors are flocking in. There are many properties trading around 100 million KRW per pyeong." (A representative from a licensed real estate agency in Apgujeong-dong, Seoul)

As distrust in public-led supply grows due to land speculation allegations involving employees of Korea Land and Housing Corporation (LH), the value of reconstruction projects in prime Seoul areas such as Apgujeong-dong and Mok-dong is soaring. While signs of housing price declines are appearing across Seoul, these areas continue to record new highs daily, buoyed by favorable factors such as approval for association establishment and passing the first safety inspection.

According to the Ministry of Land, Infrastructure and Transport's real transaction price disclosure system on the 23rd, a 196㎡ (exclusive area) unit in Hyundai 1st complex in Apgujeong-dong, Gangnam-gu, was traded for 6.3 billion KRW on the 15th of this month. This price is 1.15 billion KRW higher than the previous highest price of 5.15 billion KRW recorded last month. Similarly, a 182㎡ unit in Shinhyundai 12th complex was traded for 5.75 billion KRW last month, exceeding the previous highest price of 4.5 billion KRW by more than 1.2 billion KRW.

Apartment prices in this area have been on a steep rise since the announcement of the 'June 17 Real Estate Measures' last year, which stipulated that only residents who have lived for more than two years as association members can receive new apartment move-in rights. Each complex hastened the approval for association establishment to avoid this regulation, accelerating the projects, which acted as a positive factor. Notably, Apgujeong Districts 4 and 5 were the first among six districts within the Apgujeong special planning zone to receive association establishment approval last month. The remaining Districts 1 to 3 are also speeding up reconstruction.

The distrust in public reconstruction, which spread after the LH employees' land speculation scandal, is also cited as a cause for the price surge. A representative from a licensed real estate agency in the area said, "As distrust toward public projects grows, core private reconstruction complexes with good business potential are gaining attention. Although these are very high-priced apartments and transactions are not frequent, every deal that occurs sets a new record high."

The Mok-dong New Town area, where reconstruction is actively underway, is also experiencing a streak of record-high prices. A 91㎡ unit in Mok-dong New Town Complex 1 was traded for 2.01 billion KRW on the 1st of this month, 150 million KRW higher than last month. A 97.92㎡ unit in Complex 2 was traded for 2.04 billion KRW on the 20th of last month. The previous highest price for this size was 1.8525 billion KRW in December last year. This means the price has risen by nearly 200 million KRW in just over two months.

The Mok-dong New Town Apartments, totaling 26,635 households across 14 complexes, are simultaneously pushing forward reconstruction projects. In June last year, six complexes first passed the final safety inspection, confirming reconstruction, and currently, Mok-dong Complexes 5 and 11 are awaiting the announcement of the results of the second detailed safety inspection. Industry insiders expect the results to be released after the Seoul mayoral by-election on the 7th of next month. The outcomes for these complexes are also expected to influence the pace of reconstruction projects in the remaining complexes.

Professor Seo Jin-hyung of Gyeongin Women's University (President of the Korean Real Estate Society) said, "Due to recent incidents such as the LH scandal, distrust toward public projects has increased, drawing attention to private reconstruction. Additionally, with Seoul mayoral candidates pledging to ease regulations on reconstruction, expectations are growing even more."

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