To clear unsold apartments and officetels, developers are investing in marketing strategies offering prizes like cars and luxury handbags or giving away cash or gold bars. With the stagnation in the real estate market leading to a buildup of unsold properties, a 'guaranteed assurance program' promising various benefits to contract holders is re-emerging in the market.
According to the construction industry on the 5th, Hyundai Engineering is recruiting contract holders for its sale-type office 'Hyundai Terratower Eunpyeong' located at 63-1 Jinkwan-dong, Eunpyeong-gu, Seoul, with a condition to return 10% of the purchase contract deposit in cash.
An official from the office's sales department said, "If the contract deposit is paid as 10% of the total sale price, it can be refunded in full," adding, "This means contracts can be made without using the contract holder's own funds."
In Gangnam, Seoul, there has also been a case of officetel sales using a 'repurchase conditional' method, allowing buyers to resell to the developer at the sale price if the market price drops after signing the contract. The 'Giselle Lifegraphy Seocho' officetel in Seocho-dong, Seocho-gu, Seoul, is recruiting residents under conditions that defer the balance payment for seven years after purchasing.
In the provinces, vigorous marketing efforts are underway to attract buyers by offering congratulatory gifts, gold bars, or holding car giveaway events for apartment contract holders.
The 'Hillstate Daemyung Central 2nd' in Daegu's Nam-gu offered contract holders a congratulatory gift of 20 million won and a gold bar worth about 6 million won on a first-come, first-served basis. Additionally, it reduced the contract deposit from the original sale price of 10% to 5% and provided interest-free loan benefits for the third of the six installment payments. In the 'Pyeongtaek Prugio Center Pine' project in Pyeongtaek's Hwaryang district, contract holders received a congratulatory gift of 5 million won, and a special car giveaway event was held through a drawing for contract holders only.
The real estate industry noted that, with the recent increase in unsold properties nationwide, the 'guaranteed assurance program,' which previously thrived during past market downturns, is re-emerging. This program allows existing contract holders to benefit retroactively if the developer or sales agency offers new benefits, such as discounted pricing.
A representative from a sales agency, identified as B, said, "Given the increase in unsold units, there is a prevailing atmosphere to implement real estate guaranteed assurance programs that provide the same benefits to previous contract holders if discounted sales or promotional events are conducted. Previously, without this program, existing contract holders often could not receive benefits from discounted sales once they had signed a contract, leading to frequent conflicts between them and the developer or sales agency, but that is nearly nonexistent now."
B added, "There was also a guaranteed interest assurance program in place to prepare for times when market interest rates rise significantly for sales marketing. When contracts were signed, the interest rate was set at 5% annually, but if the rates increased beyond that, the developer would bear the cost of the interest for those individuals."
In the future, sales marketing aimed at resolving unsold properties is expected to become more vigorous. Developers are conducting various promotional marketing campaigns as a last resort since they cannot bear construction costs and financial interests without clearing unsold units, and many industry insiders believe the real estate market is unlikely to improve significantly in the near term.
C, a representative in the real estate development sector, highlighted, "The promotional marketing conducted after unsold units is referred to as post-marketing, but generally, the first step involves attracting customers with high-end prizes such as cars and luxury handbags. Following that, developers move to a 'organizational sales' model, hiring a large workforce to pay commissions per contract, during which they provide cash or goods to entice contracts."
C analyzed, "Even Seoul's apartments are facing unsold situations if they are located in areas not deemed excellent or if their sale prices are not competitive against the market. In provinces, the conditions are worse than in Seoul, so reducing unsold properties may take more time, leading to continued promotional marketing by developers and sales agencies in the future."