Buzzing 1st and 2nd Generation New Towns... Remodeling and Reconstruction Momentum

Remodeling and Reconstruction Boom in Ilsan, Bundang, Pyeongchon, etc.
Infrastructure Expansion Drives Growth in Wirye, Geomdan, Dongtan, etc.

[Asia Economy Reporters Kim Dong-pyo and Ryu Tae-min] Amid recent trading freezes in the housing market caused by real estate regulations and heavy taxation on multi-homeowners, the 1st and 2nd generation new towns are bustling day by day. The 1st generation new towns are showing signs of price increases fueled by reconstruction and remodeling prospects, while the 2nd generation new towns, with gradually improving transportation networks, are shedding their label as "the graveyard of unsold homes" and leading the rise in the metropolitan area.

According to Real Estate 114 on the 10th, the apartment price increase rate in Wirye for the fifth week of April (as of the 30th) was 0.21%. This is 0.20 percentage points higher than the previous week's increase rate of 0.01%.

In fact, the 'Wirye The Hill 55' 85㎡ (exclusive area) unit was traded at 1.59 billion KRW and 1.58 billion KRW on the 20th and 23rd of last month, respectively. This is about 250 million KRW higher than the previous transaction price of 1.32 billion KRW on the 2nd of the same month, rising by approximately 250 million KRW in three weeks. The asking price for this unit is currently set between 1.5 billion and 1.6 billion KRW.

The rise in housing prices around Wirye New Town is due to the inclusion of the Wirye Gwacheon Line and Wirye Samdong Line in the 4th National Railroad Network Implementation Plan. The Wirye Gwacheon Line was originally a 15.2 km route connecting Bokjeong Station on Subway Line 8 to Gyeongma Park Station on Line 4, but it has been extended by 20.2 km to the Gwacheon district of the 3rd generation new towns. The Wirye Samdong Line is part of the Wirye Sinsa Line extension project, connecting the tentative Wirye Central Station to Eulji University in Sujeong-gu, Seongnam City, through Shingu University in Jungwon-gu, and extending to Samdong in Gwangju City, covering a total of 13.4 km.

Not only Wirye New Town but also 2nd generation new towns such as Dongtan in Hwaseong City, Gyeonggi Province, and Geomdan in Incheon Metropolitan City have recently shown remarkable momentum. In particular, Geomdan, once called the "graveyard of unsold homes," has undergone a dramatic transformation. The 'Geomdan Station Geumgang Pentarium The Siglo,' which was offered for sale last week, attracted 11,551 applicants for 202 households (excluding special supply), closing the first-priority subscription with an average competition rate of 57.2 to 1. This is the highest competition rate ever recorded in Geomdan New Town. The change in Geomdan was also driven by transportation. Demand began to rise as the Geomdan Line, an extension of Incheon Subway Line 1 from Gyeyang Station to Geomdan New Town, is scheduled to open in 2024.

In Dongtan, where transportation benefits continue to emerge, lottery sales with capital gains reaching 1 billion KRW are also awaited. The 'Dongtan 2 New Town Dongtan Station Dietre,' which will start sales on the 11th, consists of three buildings ranging from six basement floors to 49 above-ground floors, with a total of 531 households of 84㎡ and 102㎡ exclusive areas. It is located right in front of SRT Dongtan Station, and in the future, the metropolitan area express railroad (GTX)-A, Dongtan-Indeokwon Line, and Dongtan Tram (streetcar) are expected to open. Kwon Il, head of the research team at Real Estate Info, said, "The 2nd generation new towns are popular not only because of the new construction effect but also because various infrastructure expansions are becoming visible," adding, "They are likely to lead price increases in the future."

Meanwhile, the 1st generation new towns such as Bundang, Ilsan, and Pyeongchon have begun to benefit from reconstruction and remodeling momentum. The Hansol Village 5 Complex in Jeongja-dong was the first in the 1st generation new towns to receive remodeling project plan approval in February, and the Mujigae Village 4 Complex in Gumi-dong also received remodeling project plan approval on the 27th of last month.

According to the Construction Industry Research Institute, the number of complexes in the 1st generation new towns reaching the reconstruction eligibility period of "30 years elapsed" began to surge from 2022 and will reach about 280,000 households by around 2026. Unlike reconstruction, which generally involves demolishing existing apartments, the 1st generation new towns are focusing on remodeling, which faces fewer regulations and can be implemented more quickly. While the reconstruction eligibility period is 30 years, remodeling can be done after just 15 years, and it is not subject to the Excess Profit Recovery System, which is a major obstacle to reconstruction. Also, unlike reconstruction, which requires a safety inspection rating of D or below, remodeling only requires a B or C rating.

Some complexes have also started pursuing reconstruction. According to the maintenance industry, four complexes in Seohyeon-dong, Bundang-gu, Seongnam City?Samsung, Hanshin, Woosung, Hanyang, and Hyundai?have recently agreed to jointly pursue reconstruction and are expected to form an integrated reconstruction promotion preparation committee. A real estate industry official said, "Just as buying sentiment has revived recently around reconstruction complexes in the Gangnam area, the 1st generation new towns are also likely to see housing prices stimulated by reconstruction and remodeling prospects."

Meanwhile, according to Real Estate 114 REPS, the apartment price increase rates in the 1st and 2nd generation new towns have exceeded the average increase rate in the metropolitan area. Last year, the apartment price increase rates in the 1st and 2nd generation new towns were 22.98% and 24.65%, respectively, surpassing the metropolitan area increase rate (20.34%) for the third consecutive year.

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