Among 101,000 Households, 86% Are Private... Construction Companies Shying Away from Pre-Subscription

Mixed Reactions to Expansion of Private Sales
Concerns Over Disputes Due to Unconfirmed Sale Prices
Government Purchase Pledge Full of Loopholes

[Asia Economy Reporter Jo Gang-wook] The government's plan to expand the pre-sale subscription targets not only to public but also to private sales is facing obstacles. The construction industry, the main business entity, is showing lukewarm responses, citing that the incentives are insufficient compared to the risk factors.

According to the industry on the 2nd, among the 101,000 pre-sale subscription units that the government recently decided to additionally supply, 87,000 units, or 86%, are private units. The government's plan is to supply a significant portion of the units to be sold in new public land developments such as the 3rd New Town, with 34,000 units by next year and 53,000 units after 2023, through private pre-sale subscriptions. To this end, incentives such as priority supply of public land, provision of points, and partial purchase in case of unsold units have been proposed.

However, the industry holds the view that the pre-sale subscription system itself must be approached cautiously by private entities.

The biggest concern is the risk of disputes due to the yet-to-be-confirmed sale price. The difference in position between pre-sale subscription winners and main sale winners has long been pointed out as the biggest weakness of the pre-sale subscription system itself. If the actual sale price is set higher due to project delays, conflicts between companies and consumers are inevitable.

An official from a major construction company said, "There have been cases where it took 10 years from pre-sale subscription to actual move-in, and if complaints and lawsuits arise from future subscription winners, it is doubtful whether the government can resolve these smoothly."

There are also criticisms that the government's partial purchase pledge in case of pre-sale subscription dropouts has loopholes. It is difficult to grasp the scale of risk as the purchase target is vaguely stated as a 'certain percentage,' and the appropriateness of the purchase price can also be an issue.

Kim Seong-hwan, Associate Research Fellow at the Korea Construction Industry Research Institute, said, "The public land to be supplied in the future enforces the pre-sale subscription system, so private companies have no choice but to accept it, but when creating work guidelines, close cooperation with private companies is necessary to find a mutually beneficial structure."

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