Since the Oct. 15 real estate measures were announced, transactions of row houses and low-rise multi-family dwellings in Seoul have plunged, but redevelopment properties are changing hands while setting record-high prices. In particular, backed by Seoul City's redevelopment support policies such as Moa Town (a redevelopment project for old dwellings), demand is flocking to secure old low-rise multi-family units that will be replaced with new apartment buildings.
According to the actual transaction price disclosure system of the Ministry of Land, Infrastructure and Transport on the 12th, a low-rise apartment (Wonhyo Mansion, 3rd floor) with a land equity of 65.12 square meters (about 20 pyeong) in the area around 71, Wonhyo-ro 4-ga in Yongsan District, which has been designated as a Moa Town, signed a sales contract for 1.19 billion won on the 1st. Compared with a transaction of the same low-rise apartment unit (2nd floor) with the same layout on Sept. 23 for 920 million won, it rose 270 million won in one month.
Moa Town refers to a maintenance project that quickly integrates and redevelops four to five associations of multiplex and multi-household dwellings in blocks of 100 to 400 households into a large apartment complex. Moa Town omits procedures such as approval of a promotion committee or management disposition, shortening the project period by up to about six years compared with private redevelopment. Through redevelopment, new homes can be built in as little as four years.
After passing the integrated review of Seoul City's management plan early this year, the Wonhyo-ro 4-ga Moa Town is preparing for project implementation approval. After the project implementation approval, relocation and groundbreaking will follow in sequence. A total of 604 households (including 120 rental units) are scheduled to be supplied in this area. Expectations are high that it will serve as a residential base adjacent to the Yongsan International Business District.
A licensed real estate agent in Yongsan District said, "After last month's real estate regulation announcement, transaction volume for apartments as well as low-rise housing units decreased, but inquiries about investing in units in low-rise redevelopment areas are increasing," adding, "Wonhyo-ro 4-ga Moa Town is progressing relatively fast, so demand has flocked and prices of redevelopment properties have risen significantly."
Moa Town development projects are picking up speed across Seoul. The Moa Town around 429-114 Beon-dong in Gangbuk District began construction in Dec. last year, three years after being designated as a pilot project. Kolon GLOBAL is in charge of construction and will build 13 buildings, from two basement levels to as high as 35 stories, under the "Haneulchae" brand. On Nov. 8, Daewoo E&C, selected as the contractor for the Moa Town around 78 Jung-dong in Mapo District, announced plans to build six buildings, from four basement levels to as high as 35 stories, with 543 apartments in the area. Around 86-3 Myeonmok-dong in Jungnang District is also targeting a groundbreaking at the end of next year with DL E&C as the contractor.
This contrasts with the sharp freeze in Seoul's low-rise housing market after the Oct. 15 real estate measures were announced. According to the actual transaction price disclosure system of the Ministry of Land, Infrastructure and Transport, from the 16th to the 31st, right after the announcement, the number of row house and multi-family housing sales transactions in Seoul was 469, a 71.9% decrease from 1,672 between the 1st and the 15th of the same month.
Park Won-gap, chief real estate expert at KB Kookmin Bank, said, "Seoul City is speeding up dwellings supply through redevelopment, so demand for low-rise units in redevelopment zones is increasing," adding, "You are essentially prepaying a premium to buy the right to move into an apartment, but you need to carefully assess the project's profitability and the potential for construction cost increases."