"Money Circulates in Seoul and Gyeonggi Housing Projects(?)"... PF Success in Singil 5-dong and Suwon Gwonseon Areas

As apartment prices in major areas of Seoul and Gyeonggi-do show signs of rebound, project financing (PF) funding for housing projects is being successfully secured one after another. The Shingil 5-dong local housing (land-lord housing) project, a large-scale apartment development, secured 790 billion KRW in PF funds, and project financing was also achieved in areas such as Gwonseon-gu, Suwon.

Perspective View of the New Construction for the Shingil 5-dong Regional Housing Association

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According to the investment banking (IB) industry on the 18th, the Shingil 5-dong local housing association in Yeongdeungpo-gu, Seoul, secured PF funds worth 790 billion KRW from a consortium of financial companies the day before. The loans were divided into senior loans of 720 billion KRW and subordinated loans of 70 billion KRW according to repayment and collateral priority, and investors were recruited accordingly. Securities firms such as Kiwoom Securities, Samsung Securities, and Meritz Securities mainly participated in the PF lending consortium.

The Shingil 5-dong local housing association is a redevelopment association promoting a local housing project at 413-8 Shingil-dong, Yeongdeungpo-gu, Seoul. They plan to build a large-scale apartment complex and neighborhood living facilities on a site of 75,486㎡ (approximately 22,874 pyeong), consisting of 16 buildings ranging from three basement floors to 35 floors above ground, with a total of 2,030 households. Initially, Shindongah Construction participated as the contractor, but due to difficulties in financing with Shindongah Construction’s guarantee, the contractor was replaced by Hyundai Construction last year. Recently, the contractor was changed again to POSCO E&C.

The ‘Gwonseon 113-6 District Housing Redevelopment Maintenance Project Association,’ which is promoting a redevelopment maintenance project in Gwonseon-gu, Suwon, Gyeonggi-do, also secured several hundred billion KRW in funds on the same day. KB Securities and others participated in the PF lending consortium. The association has started construction and sales of ‘Maegyo Station Pallucid’ in Seryu-dong, Gwonseon-gu, Suwon, Gyeonggi-do. It will consist of 32 buildings with two basement floors and up to 15 floors above ground, totaling 2,178 households, of which 1,234 households are being sold to the general public.

Samsung C&T, SK Ecoplant, and Kolon Global are jointly responsible for construction, scheduled for completion in October 2026. Kolon Global, one of the contractors, provided joint guarantees for part of the PF loans. The condition states that if Kolon Global’s credit rating falls below BBB- or A3-, the PF loan will be subject to an event of default (EOD). Kolon Global’s credit rating is currently A3+, leaving a margin of three notches before triggering EOD.

Maegyo Station Pallucid

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An IB industry official said, "Previously, main PF loans for apartment development projects in major station areas of Seoul, Bucheon, Songdo, and Suwon were successfully secured," adding, "Although financial companies have been quite conservative about injecting new funds during the PF restructuring process, they are injecting new funds into apartment development projects in major urban areas of Seoul and Gyeonggi-do where housing prices are rising."

According to the Korea Real Estate Board, nationwide apartment prices, which had been declining for a long time, shifted to a stable range in June, and apartment prices in Seoul and Gyeonggi-do show a gradual upward trend. Considering the average, this means the price gap between apartments in Seoul/metropolitan areas and provinces is widening. As of the second week of June, apartment prices in the metropolitan area rose 0.05% in one week, and in Seoul, the increase expanded from 0.09% to 0.1%. In particular, all autonomous districts in Seoul showed a slight increase in sales prices.

A financial company PF officer said, "Due to accumulated defaults in the PF market, the funds that financial companies can inject into the PF market are quite limited," adding, "They have no choice but to carefully select projects with viability and selectively inject funds." The official diagnosed, "As the polarization of housing prices between major areas in Seoul and Gyeonggi-do and provinces intensifies, the funding situation for development projects is also becoming polarized."

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