Affordable Old Villas Emerging as New Investment Destinations... Auction Market Also Heating Up

Expectations Rise for High Returns on Old Villas Over 20 Years with Low Investment
‘Mom-Tech’ Investments Targeting Redevelopment and Transportation Boons Also Increasing
As Seoul Housing Prices Soar, Demand Shifts to Outskirts of Incheon and Gyeonggi

[Asia Economy Reporter Ryu Taemin] #At a real estate auction held at the Incheon District Court on the 4th of last month, the hottest item was a 37㎡ (exclusive area) A Villa first-floor unit located in Jakjeon-dong, Gyeyang-gu, Incheon. This villa, built 31 years ago, attracted 31 bidders and was sold for 58.75 million KRW, 50% higher than the minimum price of 39.2 million KRW. The second-highest bid was 58.377 million KRW, showing fierce competition with only about a 400,000 KRW difference from the winning bid.

Popularity of 20-30 year-old aging row houses and multi-family villas in court-run real estate auctions is soaring. Not only in Seoul but also in relatively affordable Incheon and Gyeonggi villa auctions, dozens of bidders are gathering, leading to overheated competition. In particular, ‘Mom-tech’ investments targeting cheap first-floor or semi-basement villas are increasing, aiming for redevelopment projects or transportation benefits.

According to court auction specialist Gigi Auction on the 30th, 26 bidders competed in the auction of a 40㎡ B Villa in Ganseok-dong, Namdong-gu, Incheon the day before. Built in 1995, this property had an appraised value of 67 million KRW but the minimum bid price dropped to 22.98 million KRW after three failed auctions. It was finally sold for 41.65 million KRW, 81% (18.67 million KRW) higher than the minimum price.

In the outskirts of Seoul and Gyeonggi as well, the number of bidders for aging villas is frequently exceeding double digits. On the 17th of last month, a 60㎡ C Villa auction in Naeyu-dong, Deogyang-gu, Goyang-si, Gyeonggi, despite being a 26-year-old semi-basement unit, attracted 20 bidders and was sold for 47.84 million KRW, over 15 million KRW higher than the minimum price of 31.55 million KRW. Similarly, a 36㎡ D Villa in Gusan-dong, Eunpyeong-gu, Seoul, also a 28-year-old semi-basement unit, attracted 14 bidders and found a new owner at 77 million KRW.

Experts explain that as prices of apartments and newly built villas skyrocket, aging villas with lower price entry barriers are becoming investment targets. Especially in the auction market, prices are considered relatively cheaper than in the sales market, which could maximize future returns and capital gains.

Song Seunghyun, CEO of City and Economy, explained, “As the real estate boom continues, expectations have formed that prices of aging villas will rise further. Aging villas can be purchased cheaply, so they are considered valuable as long-term investment products.”

For the time being, ‘Mom-tech’?targeting opportunities such as redevelopment or transportation benefits even if living in an old house?is also trending. Lee Joo-hyun, senior researcher at Gigi Auction, said, “Especially for established villas, the land share is generally larger than new buildings, so they are considered to have higher investment value.”

The average number of bidders in villa auctions has also increased. According to Gigi Auction, from January to August this year, the average number of bidders in villa auctions in Incheon and Gyeonggi was 5.1 and 4.4 respectively, up from 3.26 and 3.22 in the second half of last year.

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