Dunchon Jugong Takes a Breather... Long Road Ahead for Year-End Sale

New Executive Team Formed to Restore Normalcy
Many Pre-Sale Procedures Remain
October Sale This Year Seems Difficult

[Asia Economy Reporter Kim Hyemin] The Dunchon Jugong Apartments in Dunchon-dong, Gangdong-gu, Seoul, considered the biggest catch in this year's housing market, is forming a new executive team after about nine months and is set to resume normal operations. Dunchon Jugong is a complex with a total construction scale of about 10,000 households and is located in the greater Gangnam area, attracting significant attention from prospective buyers. However, although the formation of the new executive team has overcome a major hurdle, many challenges remain, and there are expectations that the originally planned second-half sales will not be easy.

According to the maintenance industry on the 24th, the Dunchon Jugong Reconstruction Association will hold an extraordinary general meeting on the 29th to elect a new association head and executives. A single candidate has registered for the association head position, increasing the likelihood of election. If the association head is elected as scheduled, it will mark the launch of a new executive team nine months after the previous team was dismissed in August last year.

The existing 5,930 households of Dunchon Jugong will be transformed through reconstruction into 85 buildings ranging from three basement floors to a maximum of 35 floors above ground, totaling 12,032 households. The general sales volume alone reaches 4,786 households. The area was designated as a maintenance zone in November 2006, received management disposition approval in May 2017, and construction began at the end of 2019.

The association initially planned to start general sales last year, but internal conflicts over pricing delayed the schedule repeatedly. The previous association pushed for a price of 29.78 million KRW per 3.3㎡ proposed by the Housing and Urban Guarantee Corporation (HUG) to avoid the price ceiling system, which led to strong opposition from association members who formed an emergency committee, resulting in the dismissal of the entire executive team in August last year.

Since then, progress has been slow. The association under the acting executive system planned to form a new executive team at an extraordinary general meeting in April, but due to the aftermath of past internal conflicts, some members filed an injunction to prohibit the meeting, which the court accepted, causing the meeting to be canceled once. If the new executive team is established as scheduled on the 29th, the reconstruction project is expected to gain momentum again.

However, the originally planned October sales this year are expected to be difficult. Many preliminary procedures for sales remain. Negotiations with the construction company and construction costs must also be conducted. Since this also requires HUG's guarantee, it is analyzed that it will take time. As completion is scheduled for August 2023, the possibility of post-sale is also being discussed. However, if switching to post-sale, the association would have to self-finance 80% of the total project cost of 2.6 trillion KRW, increasing the burden and making it difficult.

Dunchon Jugong, which is subject to the price ceiling system, will ultimately have its sales price influenced by land prices. Unlike HUG's review standards, the price ceiling system allows higher sales prices as land prices rise. Industry experts estimate an average price of 37 million KRW per 3.3㎡ considering the increase in standard land official prices and construction costs. Even a slight increase from this would push the general sales price of the most common 59㎡ units over 900 million KRW, making mid-term group loans impossible.

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