“Who Would Buy This House for 8 Billion Won?!” The Disappointing Sale of Unallocated Units at Twice the Price

Unallocated Units at Raemian One Pentas Unsold

Prices Set at Twice the General Sale Price

Unallocated Units at Raemian One Pentas Unsold

Prices Set at Twice the General Sale Price… Market Value Level

Association Official: “No Decision Yet on Reannouncement”

In the core areas of Seoul, high prices for unallocated units are leading to unsold properties. Despite a continued shortage of new apartments and rental listings, high prices for unallocated units are resulting in even high-value properties in Gangnam being ignored by investors and potential buyers.

On the 8th, it was reported that all three unallocated units at ‘Raemian One Pentas,’ a redevelopment project of the Sinbanpo 15th Apartments in Banpo-dong, Seocho-gu, Seoul, failed to sell. An official from the redevelopment association stated, “There were no bidders for the unallocated units during the sale at the end of last month. All three units were unsold, and a decision on whether to reannounce the sale has not yet been made.”

The units, with sizes of 59㎡, 107㎡, and 155㎡, were put up for competitive bidding on the 23rd of last month. The bidding was to end on the 30th, with contracts to be finalized on the 2nd, but the sale fell through. The high starting price and the need for a large amount of cash in a short period likely contributed to the lack of buyers.

Unallocated units are properties retained by redevelopment or reconstruction associations to accommodate future changes in membership and are not sold to the general public. Associations can designate up to 1% of the total units as unallocated. These units can be bid on without the need for a subscription passbook, making them accessible to applicants with low points and multiple homeowners. The bidding is conducted through a highest-bidder method.

In this bidding, the prices were set at 3.5 billion won for 59㎡, 5.8 billion won for 107㎡, and over 8 billion won for 155㎡. Compared to general sale prices, which were around 1.6-1.7 billion won for 59㎡, 2.7-2.9 billion won for 107㎡, and 4.2 billion won for 155㎡, these prices were about twice as high. Additionally, the contract required a 20% deposit of the winning bid and the remaining 80% to be paid by November 1st.

The prices are similar to nearby market values. For instance, a 59㎡ unit at ‘Raemian One Bailey’ in Banpo-dong, Seocho-gu, Seoul, sold for 3.6 billion won in July. Similarly, a 59㎡ unit at ‘Acro River Park’ in the same area sold for 3.3 billion won, and larger units of 112㎡ sold for 5.5 billion won and 5.76 billion won respectively.

The frequent high pricing of unallocated units in Gangnam redevelopment projects reflects a confidence that the properties can eventually be sold despite multiple failed attempts. For example, the redevelopment association of Gaepo 1-dong’s Gongneung 1-dong Apartment Project repeatedly raised prices for unallocated units of ‘The D-H First Tier I-Park’ last year and successfully sold all units. In May, the last unit was initially listed at 2.45 billion won but was sold for 2.55 billion won after a price increase of 100 million won in just one month.