A reserved unit at a newly built apartment complex in Yongsan District, Seoul, was put on the market but failed to sell. Because the reserved unit sale, first announced last month, could avoid the land transaction permit zone (Toheo zone) regulation, it was expected to draw strong interest. However, after the Oct. 15 measures sharply reduced the loan limit and required buyers to prepare funds nearing 3 billion won in a short period, the sale of the reserved unit fell through contrary to market expectations.
A reserved unit is a dwelling that a reconstruction or redevelopment association withholds from general sale to prepare for contingencies such as lawsuits. An association can secure reserved units within 1% of the total number of households. A subscription savings account is not required when purchasing a reserved unit. Regardless of the number of dwellings owned, bidding is possible, and there is the advantage of being able to buy at a price lower than the market rate.
According to the maintenance industry on the 19th, the Urban Maintenance-Type Redevelopment Association for International Building Surroundings District 5 posted a sale bid notice on Oct. 1 for two reserved units: a Hoban Summit Edition 84 square meters type B exclusive apartment (20th floor) and a 42 square meters type A exclusive officetel (12th floor). The minimum bid prices were 2.975 billion won for the apartment and 944 million won for the officetel, with the units to be sold to the highest bidder through competitive bidding.
Hoban Summit Edition is a residential complex located at 210-1, Hangangno 2-ga, Yongsan District, consisting of one building with eight underground floors and 39 above-ground floors, comprising 110 apartment households, 77 officetel rooms, 51 office rooms, and commercial facilities.
Because it was a reserved unit sale for a newly built apartment in Yongsan District, the bidding was expected to be highly competitive. Although the reserved unit sale price was more than 1.3 billion won higher than the highest pre-sale price (same floor plan) of 1.6339 billion won, the rarity of a new build in Yongsan and the exemption from Toheo zone regulations—allowing gap investment by carrying a jeonse and settling the balance—led to expectations of a smooth sale.
However, this apartment's reserved unit failed to find a buyer. That is because loan regulations were tightened after the Oct. 15 measures were announced. As the Hoban Summit Edition apartment reserved unit exceeds a market price of 2.5 billion won, the loan limit is capped at 200 million won.
In addition, while reserved unit sales are not subject to Toheo zone restrictions, the strengthened loan regulations create an owner-occupancy requirement if a buyer uses financing rather than cash to purchase the dwelling, blocking gap investment. In particular, reserved unit sales typically require the balance to be paid within one to two months after the deposit is paid. As a result, only end users holding nearly 3 billion won in cash could participate in the bidding.
Moreover, because registration for this apartment complex has not been completed, actual transaction prices for sales are not available, and the market analyzes that the difficulty of making a direct comparison with nearby mixed-use complexes, which are largely composed of larger floor plans, was another reason the reserved unit bidding struggled to succeed.
The association plans to repost the reserved unit sale notice soon. The association said that instead of conducting competitive bidding as in the first sale notice, it plans to proceed with a first-come, first-served pre-sale for the reserved units. An association official said, "We plan to announce the same amount but proceed on a first-come, first-served pre-sale basis."