Hyundai E&C has converted the 'Hillstate Shihwa Lake Lagoon Interpass 1st' residential lodging facility in Songgok-dong, Danwon-gu, Ansan, under its construction.
With about a month to go before moving in, the buyers who were struggling with tenant recruitment and final loan payments have been able to either reside in the property or rent it out without enforcement fines since the designation was changed to an officetel.
According to the real estate industry on the 19th, Ansan City sent a permit for a building, major repairs, and changes in use that includes changing the main use of Hillstate Shihwa Lake Lagoon Interpass 1st from a residential lodging facility to an officetel to the owner, Hana Asset Trust, on the 16th.
Hillstate Shihwa Lake Lagoon Interpass 1st is a residential lodging facility with 2 basement floors and 49 above-ground floors, consisting of eight buildings and 2,554 units. The construction firm is Hyundai E&C, the implementation company is MTV Vandal Island C1 Development PFV Co., Ltd., the sales agency is Mirae In, and the trust company is Hana Asset Trust.
This residential lodging facility was supplied in June 2021 when the national real estate market was booming, highlighting that it was not included in the housing count, hence avoiding heavy taxes such as capital gains tax and acquisition tax. The fact that it did not require a subscription account and had no restrictions on re-winners, along with the ability to transfer, also captured the attention of buyers.
However, in October 2021, the government declared that "residential lodging facilities are not residential properties" and stated that enforcement fines would be imposed if used for residential purposes, leading to a series of collective lawsuits by buyers against the implementation and construction companies.
About 200 buyers of Hillstate Shihwa Lake Lagoon Interpass 1st filed a damage compensation lawsuit demanding the cancellation of the sales contract against Hyundai E&C, Mirae In, and Hana Asset Trust in May of last year. The buyers alleged that promoting the ability to live in the residential lodging facility was nothing short of fraudulent sales.
As conflicts between residential lodging buyers and the construction and implementation companies continued, the government announced a "support plan for legal use of residential lodging facilities" in October of last year to assist in changing the use of existing residential lodging facilities to officetels.
According to Ansan City, this conversion of Hillstate Shihwa Lake Lagoon Interpass 1st to an officetel is the result of benefiting from this support plan.
To convert the residential lodging into an officetel, parking spaces, hallway widths, and fire safety equipment suitable for officetels must be installed. Also, if the use approval has not been received, a 100% agreement rate from the buyers regarding the change of use must be fulfilled. However, once use approval is received, the implementation company can change the use with just their agreement.
Since Hillstate Shihwa Lake Lagoon Interpass 1st previously received use approval as a residential lodging facility, it could change its use with the agreement of only the implementing company, Hana Asset Trust. Additionally, the large scale of over 2,000 units and the not-so-high construction completion rate made it easier to build the necessary officetel facilities such as parking areas and fire safety systems.
A representative from Ansan City said, "The processing of the conversion to officetel was completed on the 16th. After consultations with related institutions such as the police station, fire station, and education office, if the completion is approved, residents will be able to move in starting in June."
The buyers expressed relief that the conversion to officetel has somewhat alleviated their funding issues.
A buyer of Hillstate Shihwa Lake Lagoon Interpass 1st, referred to as Mr. A, stated, "When it was classified as a residential lodging facility, only about 30% of the building's appraised value could be loaned, but once it's changed to an officetel, loans of up to 60-70% are possible. It's a relief that I can now either reside in it or rent it out for leases or monthly rent."
A representative from Hyundai E&C noted, "As some buyers withdrew their lawsuits for the cancellation of sales contracts they filed last year, the number of lawsuits has decreased."