One-Year Extension of Land Transaction Permission Zone for 'Gukje Gyoryu Bokhap Jigu'

The application of the land transaction permission zone has been extended for one more year in four neighborhoods near Seoul’s ‘International Exchange Complex District’ (Jamsil-dong in Songpa-gu, and Samseong, Cheongdam, and Daechi-dong in Gangnam-gu).

On the 13th, the Seoul Metropolitan Government held an Urban Planning Committee meeting and announced that it had reviewed and approved the re-designation of the land transaction permission zone (totaling 14.4㎢) for the International Exchange Complex District and its surrounding areas. The city had discussed the proposal at the 8th Urban Planning Committee meeting on the 5th but had decided to defer it.

The city explained the background for the re-designation, stating, “Recently, there has been a recovery trend mainly in apartments, especially with a high recovery rate in the three Gangnam districts. Since apartment sale prices across Seoul began to rise again in June this year, loosening regulations could further destabilize apartment prices.”

These areas were designated as land transaction permission zones in June 2020 due to concerns that speculative demand might flow in during the development of the International Exchange Complex District, which spans approximately 1.99 million square meters from COEX in Gangnam-gu to Jamsil Sports Complex in Songpa-gu. The designation has been extended three times since then and was scheduled to expire on the 22nd of this month.

Map of the land transaction permission zone designated in Gangnam-gu, Seoul. Photo by Seoul City

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Map of the land transaction permit zone designated in Songpa-gu, Seoul. Photo by Seoul City

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When designated as a land transaction permission zone, transactions involving housing, commercial buildings, or land exceeding certain standards 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 solely for actual residence for two years, and sales or leasing are prohibited during this period.

With this decision, the land transaction permission zone in this area will be extended for one year from the 23rd of this month until June 22 of next year.

The city decided to maintain the threshold for land area requiring permission at about 10% of the legal standard area, as was done last year (exceeding 6㎡ in residential areas and 15㎡ in commercial areas), considering the effectiveness of the permission zone designation within urban areas.

However, the city noted that there are opinions calling for a comprehensive review of the system, including the effect on land price stabilization before and after the designation of the land transaction permission zone, and plans to submit the agenda to the Urban Planning Committee within this year for re-examination to set policy directions.

Cho Nam-jun, head of the Seoul Metropolitan Government’s Urban Space Headquarters, said, “As both the sales and rental markets have turned upward, investor interest is concentrating in well-located areas, which could lead to overheating of the real estate market in surrounding areas as well. The re-designation of the land transaction permission zone is an unavoidable measure to prevent overheating in the real estate market.”

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