The number of PF business sites put up for sale due to the recession in the domestic real estate project financing (PF) market has increased for two consecutive months. Cases of residential facility development projects, such as apartments and mixed-use complexes, being transferred to auction and public sale are continuing not only in the provinces but also in Seoul.
According to the Korea Financial Investment Association's information disclosure platform on the 14th, there are 384 real estate PF business sites currently being sold as of March 31 this year. This is nearly double the 195 business sites reported on January 22 this year.
The financial sector's exposure, including PF loans, land collateral loans, and debt guarantees, has also increased. It jumped from 3.1 trillion won in January to 6.3 trillion won in March.
Looking at the PF business sites up for sale by region, the number in the provinces more than doubled from 111 in January to 237 in March. The metropolitan area also increased by 75% from 84 to 147. In the metropolitan area, Seoul increased from 17 to 30, a 76% increase. However, the proportion of Seoul among the national PF business sites being sold decreased from 8.7% to 7.8%.
In Seoul, where the conditions for apartment sales are better compared to the provinces, the number of residential facilities transferred to auctions and public sales has steadily increased.
The number of residential facility PF business sites, including apartments, mixed-use complexes, multi-family houses, and townhouses, currently under sale in Seoul has increased from 10 in January to 18 in March. Among them, seven are commissioned but have not found owners, thus being labeled as "unsold properties due to vicious cycles."
In the real estate finance industry, it is seen that concerns about the deterioration of real estate PF are spreading as construction companies face liquidity deteriorations and demand for real estate purchases decreases.
Huh Seo-jin, a senior researcher at Hana Financial Group, noted, "Bad PF business sites are facing insufficient transactions as the asking prices of sellers and buyers are not converging. In particular, non-residential business sites in regions with severe real estate market recessions are struggling to normalize."
Analyses suggest that if bad PF business sites are not resolved, it could lead to further deterioration of liquidity for construction companies, potentially disrupting supply.
Professor Ko Jun-seok from Yonsei University's Sangnam Institute of Management stated, "Even if many bad PF business sites are on the market, there are no construction companies willing to buy them. For construction companies to restore financial health, they first need to clear the stock of unsold properties, but the current unsold properties are not being absorbed in the market."
Professor Ko added, "If the liquidity of construction companies worsens, the future supply shortage issue will be intensified, and to resolve the vicious unsold properties in regions with severe real estate market recessions, the government should consider providing tax benefits such as exemption from transfer taxes for buyers and reductions in acquisition taxes and comprehensive real estate taxes for corporate entities before it's too late."