"Preventing Overheating"... Jamsil, Samsung, Cheongdam, Daechi Land Transaction Permission System Extended for 1 More Year

Blocking Speculative Demand Inflow Amid Large-Scale Development Project Visibility Increase

The area around Eunma Apartment in Daechi-dong, Gangnam-gu, Seoul. Photo by Hyunmin Kim kimhyun81@

[Asia Economy Reporter Onyu Lim] Jamsil-dong in Songpa-gu, and the areas of Samseong-dong, Cheongdam-dong, and Daechi-dong in Gangnam-gu, Seoul, will once again be designated as land transaction permission zones. The Seoul Metropolitan Government explained that this is a "preemptive measure to prevent overheating of the real estate market due to development projects."

◆ Re-designation of land transaction permission zones in Jamsil, Samseong, Cheongdam, and Daechi = On the 9th, the city held an urban planning committee meeting and approved the designation plan for these land transaction permission zones, the city announced on the 10th. The target areas?Jamsil-dong, Samseong-dong, Cheongdam-dong, and Daechi-dong?cover approximately 14.4㎢ and are locations where large-scale development projects related to the international exchange complex district are underway. The core plan is to create a MICE (Meetings, Incentives, Conferences, and Exhibitions) hub linking four key industry facilities (international business, sports, entertainment, exhibition/convention) and waterfront spaces across 1.66 million square meters stretching from COEX to Hyundai Motor GBC (former KEPCO site) to Jamsil Sports Complex.

The city had previously designated this area as a land transaction permission zone from June 23 last year to June 22 this year due to concerns about speculative demand inflow. A Seoul city official explained, "We judged that lifting the permission zone would likely cause a sharp rise in land prices and an influx of speculative forces, so we decided to re-designate it this year following last year."

When an area is designated as a land transaction permission zone, transactions involving housing, commercial buildings, or land above a certain standard require approval from the mayor or district head. If a contract is made without permission, the offender may face imprisonment of up to two years or a fine of up to 30% of the land price. In particular, residential land must be used only for actual residence for two years, during which sales or leasing are prohibited.

The city plans to actively consider extending the designation period or expanding the designated area depending on future real estate market conditions. Choi Young-chang, head of the Seoul Land Management Division, said, "This re-designation is essential to actively support the expansion of housing supply," adding, "Although there are concerns about balloon effects, it is expected to be effective in restructuring the market centered on actual residents."

◆ City: "Reduction in transaction volume proves calming effect"... Experts: "Price suppression has limits" = The city analyzed that the land transaction permission zone had a calming effect on the market. Analyzing the transaction volume in Jamsil-dong, Samseong-dong, Cheongdam-dong, and Daechi-dong for 10 months before and after the designation, the number of transactions dropped from 3,197 to 1,349, a 58% decrease. Accordingly, areas such as Apgujeong-dong in Gangnam-gu, Yeouido-dong in Yeongdeungpo-gu, Mok-dong in Yangcheon-gu, and Seongsu-dong in Seongdong-gu, where prices surged due to expectations of reconstruction and redevelopment after Mayor Oh Se-hoon's inauguration, were also designated as land transaction permission zones.

However, some argue that although transaction volume decreased due to the designation, the effect on suppressing house price increases was limited. For example, the actual transaction price of Eunma Apartment 84㎡ (exclusive area) in Daechi-dong rose from a peak of 2.2 billion KRW in June last year to 2.5 billion KRW in April this year. The price of Xi 89㎡ in Cheongdam-dong increased from 3.15 billion KRW in June last year to 3.5 billion KRW in May this year. Yang Ji-young, director of R&C Research Institute, pointed out, "The designation of land transaction permission zones creates psychological pressure that initially reduces transaction volume, but due to expectations of development and capital gains, as well as increased scarcity, house prices tend to rise in the long term."

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