59㎡ Units Surpass 84㎡ in Supply, Boosting Project Profitability [Real Estate AtoZ]

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"We try to include as many 59-square-meter units as possible in the general pre-sale supply. Since the construction area is smaller than that of the 84-square-meter units, we can increase the number of units supplied." (Head of the Reconstruction Committee for Apartment Complex A in Geumho-dong, Seongdong-gu, Seoul)

The share of 59-square-meter units in Seoul's pre-sale housing market has risen. This is because, compared to the 84-square-meter units-often called the "national standard"-the pre-sale prices do not differ much, but a greater number of units can be supplied, which in turn increases pre-sale profits. Analysts say that the growing preference among real end-users is also a positive factor for strong sales performance.

According to the construction industry and other sources as of April 30, all 56 general pre-sale units at "Acro de Seocho" in Seocho-dong, Seocho-gu, developed by DL E&C, are 59 square meters in size. "Define Yeonhui," the first pre-sale project in Seoul this year, which is redeveloping the Yeonhui 1 district in Seodaemun-gu, also has more than half of its supply as small-sized units. Of the 332 general pre-sale units, 172 units, or 51.8%, are 59 square meters. In contrast, 112 units of 84 square meters were supplied for general pre-sale. The competition ratio for 59-square-meter units was 57 to 1, higher than the average competition ratio of 44.1 to 1.

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The main reason that reconstruction associations and other organizations are increasing the supply of small-sized apartments for general pre-sale is related to business profitability. Supplying more smaller-sized units allows for a greater overall number of households. The social trend of declining household size has also been taken into consideration.

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The increasing burden of construction costs is another important reason for the preference for smaller units. Until 2023, the average construction cost for urban renewal projects in Seoul was 6.73 million won per 3.3 square meters. By 2024, this had risen to 8.43 million won, and last year, it reached 8.9 million won. With rising interest rates and raw material prices, higher construction costs inevitably translate into higher cost burdens for association members.

The renewed focus on 59-square-meter units can be clearly seen in the pre-sale market before construction costs surged, such as in 2023. The "The Sharp Gangdong Central City" project in Cheonho-dong, Gangdong-gu, offered 168 general pre-sale units, of which only 66 units (39.3%) were 59 square meters. In the same year, the "Sangdo Prugio Clavenue" in Sangdo-dong, Dongjak-gu, provided 771 general pre-sale units, with 261 units (33.9%) being 59 square meters. In contrast, there were more units of 74 and 84 square meters, totaling 510 units (66.1%).

Strong end-user demand is also accelerating the increase in 59-square-meter supply. The pre-sale price of 59-square-meter units is generally 200 million to 300 million won lower than 84-square-meter units, making them an option for those facing difficulties securing funds due to tightened loan regulations.

An industry insider said, "As household sizes shrink, there is less demand for larger units, and both the 59-square-meter and 84-square-meter units offer the same layout of three bedrooms and two bathrooms," adding, "The national standard is shifting from 84 square meters to 59 square meters."

Nam Hyukwoo, a researcher at the Woori Bank Real Estate Research Institute, explained, "As the price of properties that applicants want to purchase in preferred locations continues to rise due to increased construction costs, buyers have no choice but to consider smaller units. In general, associations are moving toward diversifying into smaller units and maximizing the number of units available for pre-sale in order to pursue greater profitability."

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