Major Developers 'Shake' Amid Real Estate Slump... Sharp Decline in Sales and Operating Profit Last Year

Total Operating Profit of 3 Companies Down 57% Year-on-Year
MDM Shows Largest Decrease in Sales and Operating Profit
DS Networks Solely Achieves 1 Trillion KRW in Sales

Due to the real estate market downturn, the performance of the three major domestic developers significantly declined last year. MDM, the top developer in terms of operating profit, saw its sales and annual operating profit drop by more than 60% compared to the previous year, while Shinyoung, ranked third in the industry, experienced a decrease in operating profit of over 50%. DS Networks, the top developer by sales, was the only one to surpass 1 trillion KRW in sales, but its performance was somewhat sluggish compared to the previous year.

According to the Financial Supervisory Service's electronic disclosure system on the 1st, the combined sales (consolidated basis) of the three major domestic developers (MDM, DS Networks, Shinyoung) last year amounted to 2.4933 trillion KRW, a 36.3% decrease from 3.9142 trillion KRW the previous year. The combined operating profit recorded 279.1 billion KRW, down 57.4% from 655.4 billion KRW the previous year.

DS Networks, MDM, Shinyoung CI.
Photo by each company

Among the three companies, MDM experienced the largest decline. Last year, its sales were 443.9 billion KRW and operating profit was 117.2 billion KRW, representing a sharp drop of 66.1% in sales and 72.3% in operating profit compared to the previous year. MDM recorded sales of 1.337 trillion KRW and operating profit of 418.3 billion KRW in 2021.

Shinyoung, ranked third in the industry by sales and operating profit, also saw a significant decrease in performance. Last year, its sales were 805.1 billion KRW and operating profit was 48.3 billion KRW, down 27.7% and 49.6% respectively from the previous year. Shinyoung had sales of 1.114 trillion KRW and operating profit of 95.9 billion KRW in 2021.

Lastly, DS Networks recorded sales of 1.2443 trillion KRW last year, making it the only developer to exceed 1 trillion KRW in sales. However, this was a 16.3% decrease from 1.4873 trillion KRW the previous year. Operating profit also declined by 16.4%, recording 113.6 billion KRW compared to 136 billion KRW the previous year.

The poor performance of these three major developers is attributed to the real estate market downturn caused by worsening domestic and international macroeconomic conditions, including interest rate hikes and soaring construction raw material prices that began last year. In particular, as the problem of real estate project financing (PF) insolvency worsened, financial authorities took preemptive measures to manage loan risks, which led to a deterioration in the business environment. Additionally, the deepening transaction freeze due to falling housing and rental prices caused companies to postpone projects, resulting in significant sales declines.

The situation remains unfavorable this year. Although the real estate market in Seoul and the metropolitan area is showing signs of recovery due to government deregulation measures such as the 1·3 real estate policies, it is premature to consider this a full-fledged recovery. Moreover, many of the projects undertaken by these developers in the second half of last year and this year still have unsold units accumulating.

In response, the three major developers are each pursuing various strategies to overcome the crisis. The most notable is DS Networks, which recently undertook organizational restructuring to stabilize internal management and has put up properties such as the Seongsin Women's University Station site in Dongso-mun-dong, Seoul, the Oncheon-dong mixed-use complex site in Busan, and the Gwaebeop-dong mixed-use complex site in Busan for sale as part of portfolio reorganization and liquidity securing efforts.

Shinyoung has introduced the "rent then sell" strategy to manage risks in its core projects. The company plans to convert "Brighton Yeouido," a luxury residential and commercial complex being developed on the MBC site in Yeouido, into a "4-year short-term private rental" before selling.

Unlike DS Networks and Shinyoung, MDM Plus is adopting an aggressive marketing strategy. It is offering substantial discounts on projects with unsold units, such as "Unjeong Prugio Parkline," and is launching an aggressive marketing campaign by fully mobilizing its resources for the "e-Pyeonhansesang Yongin Station Platform City," which began first-priority subscription on the 3rd of this month. However, since the highest sale price for the 84㎡ exclusive apartment is as high as 1.235 billion KRW, there is a possibility that unsold units in MDM's projects may increase further.

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