'Tteotdabang' Rampant Even in Private Rental Apartments... Over 100 Million Won Premium for Low Floors

Suji-gu Office Station Lotte Castle Hive L
Average Subscription Competition Rate 227 to 1

On the 8th, real estate agents are facilitating the resale transactions of these apartments near the model house of 'Sujigu Office Station Lotte Castle Hiveel' in Yongin-si, Gyeonggi-do.

[Asia Economy Reporter Kangwook Cho] Around 5 p.m. on the 7th, the area near Dongcheon Station in Yongin, where the ‘Suji-gu Office Station Lotte Castle Hive L’ model house is located, was bustling with people despite the rain. As soon as the reporter parked the car in the underground parking lot and went up to the first floor, two women who appeared to be in their 40s immediately approached and asked, "Are you a winner?" When the answer was no, they asked again, "Then are you planning to buy? How much are you thinking of paying?"

Around the model house, there were so-called ‘tteotdabang’?mobile brokers?along with winners trying to resell at a premium and buyers. Brokers gathered in groups of three to five, constantly exchanging updated listings and market price information, connecting buyers and sellers nonstop via mobile phones.

This complex is a long-term general private rental housing. On the surface, it is a product far from an investment item. The apartments, all composed of 84㎡ (exclusive area), have a deposit of 900 million KRW and a confirmed pre-sale payment of 50%. Additionally, the monthly rent is 1 million KRW, which is a considerable condition for tenants. The total pre-sale price upon conversion is also around 1.37 billion to 1.43 billion KRW. However, the subscription results exceeded expectations. With 715 units supplied, a total of 162,683 people applied, recording an average competition rate of 227 to 1. On the day of the winner announcement, the pre-sale website even crashed.

A winner, Mr. A, met on site said, "I received a call to sell the unit I won on the 3rd floor, which is a low floor, with a premium of 130 million KRW." It was reported that even the 1st floor, which is less preferred locally, had a premium of 100 million KRW. In fact, one broker said, "There are no listings below a 200 million KRW premium for units above the mid-level floors," and encouraged buying by saying, "Considering future price increases, this price is cheap."

The reason why demand is concentrated on private rental apartments and transactions occur with premiums is due to the ‘priority supply right’ given during the pre-sale conversion process after the rental period expires. It is an investment aiming for potential capital gains after pre-sale conversion. Especially, since there is no resale restriction and winners can resell immediately after winning, and anyone aged 19 or older who is a household head can apply without restrictions such as subscription savings account or home ownership, these factors are cited as reasons for the high subscription competition rate.

Because of this, there is an analysis that speculative subscription applications aiming for capital gains such as ‘lottery pre-sale’ and ‘early premium (Chopi)’ are flooding in rather than applicants for actual residence. In the case of private rental apartments, they are not included in the number of houses owned, there is no interest on interim payments, and there is no capital gains tax on the transfer of pre-sale rights upon tenant succession.

A winner, Mr. B, met here said, "Actually, I applied to get the early premium and sell, and I was lucky," adding, "I inquired at several places, and it seems that about 150 million KRW is traded immediately." In fact, files named ‘winner list’ could often be found on real estate-related online communities. This was just one day after the winners were announced on the 6th.

Real estate officials are pointing out the need for caution regarding the overheating phenomenon appearing in private rental apartments. A representative from a real estate agency near Suji-gu Office Station said, "As house prices soar, inquiries about buying and selling pre-sale rights for private rental apartments are active," but added, "However, the fact that a premium of 200 million KRW is attached even to rental apartments that are not guaranteed as one’s own home shows an overheated aspect."

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