The land sale market in major reconstruction and redevelopment areas of Seoul is showing significant divergence. With tightened loan regulations making cash mobilization crucial, high-value land parcels in prime locations are being sold for around 4 billion won, while some areas are lowering prices after failing to attract buyers.
On July 14, the Seoul city government and the construction industry reported that the Jamsil Jinju Apartment Reconstruction Association announced a re-bidding for one unit of 84 square meters at the Jamsil Raemian I-Park. Bidding will take place until July 24, with the highest bid selected through a competitive auction.
Last month, the association offered six units, including two 59-square-meter units and four 84-square-meter units, through a public competitive bidding process. The starting prices were set at 3.08 billion won for the 59-square-meter units and 3.9 billion won for the 84-square-meter units. Despite the 84-square-meter price nearing 4 billion won, five of the six units found buyers in the first round of bidding.
The only unit up for re-bidding is the 84-square-meter unit that did not sell. The association has maintained the starting price at 3.9 billion won, likely believing it remains competitive given that similar units are currently listed at prices between 4.3 billion and 4.6 billion won.
In contrast, the Susaek 7 Redevelopment Association in Eunpyeong is struggling to sell its land parcels. In early June, the association listed an 84-square-meter parcel with a starting price of 1.5 billion won but failed to attract any bids. On June 24, the price was lowered to 1.45 billion won, but it still went unsold. In the latest announcement this month, the starting price was further reduced to 1.42 billion won, marking an 80 million won decrease in just a month.
Land parcels are units that reconstruction and redevelopment associations retain for sale through public competitive bidding rather than general sales. Bidders can participate without a subscription account, and often do not need to meet membership qualifications, distinguishing this market from general sales.
However, successful bidders must pay the deposit, interim payments, and final payments within a relatively short timeframe, necessitating strong financial capabilities. With recent loan restrictions and stricter debt service ratio (DSR) management, the importance of cash mobilization has increased, leading to a widening gap in demand based on location and price competitiveness.
The recent land sale market has clearly differentiated between popular and less desirable areas. The 'Indeokwon Persville' in Uiwang City reportedly sold all 16 units offered last month. Similarly, 10 out of 12 units at 'Raemian La Grande' in Dongdaemun District were sold, with some 59-square-meter units fetching prices 170 million won above the minimum bid.
Conversely, areas with lower location competitiveness or price appeal are experiencing repeated failures to sell, leading to price adjustments. Since land parcels require quicker payment schedules than regular sales, worsening loan conditions are likely to narrow the buyer pool to those with cash reserves.
Ko Jong-wan, director of the Korea Asset Management Institute, stated, "The land sale market is more significantly affected by loan regulations due to its shorter financing period compared to regular sales. The recent loan restrictions and DSR enhancements have made it difficult for buyers lacking cash mobilization to enter the market, resulting in polarization based on location."
* This article has been translated by AI.
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