Since the Oct. 15 real estate measures, mixed-use apartment complexes in Seoul have surged in popularity in the auction market. Generally, demand for mixed-use apartment complexes is lower than for apartments. But as all of Seoul was designated as a regulated area and loan curbs tightened, auction demand appears to be increasing for mixed-use apartment complexes in highly preferred locations such as Gangnam and Mok-dong.
According to GGAuction, an auction information firm, on the 10th, auctions were held for 41 mixed-use apartment complexes last month, when the Oct. 15 measures took effect in earnest, and 16 were sold. The success rate was 39.0%, up nearly 10 percentage points from the previous month (29.6%). It also rose sharply compared with this year's average auction success rate for mixed-use apartment complexes of 25.9%.
Typically, mixed-use apartment complexes have less demand than apartments, which are classified as multifamily housing. But as apartment prices have surged recently, some bidders in the auction market are turning from apartments to mixed-use apartment complexes. Buying a mixed-use apartment complex at auction can avoid loan restrictions. Also, auction appraisal values are set based on market prices from six months earlier, significantly reducing the purchase burden. the land transaction permit system does not apply, so the obligation to occupy for actual residence can also be avoided.
Auction demand for mixed-use apartment complexes is forming mainly in highly preferred areas in Seoul that are considered top-tier locations. Lee Juhyeon, a senior analyst at GGAuction, said, "Mixed-use apartment complexes are less preferred than regular apartments," but added, "While it is typical for bid price ratios and competition rates to be relatively low, the recent rise in success rates suggests that properties that failed once have been absorbed. As regular apartment prices rise, it appears that mixed-use apartment complexes in preferred areas in those same districts are rising as well."
In fact, in areas such as Gangnam, the auction success rate for mixed-use apartment complexes is exceeding the average across Seoul. In Gangnam District, five mixed-use apartment complexes went to auction last month and four were sold, resulting in an 80.0% success rate. In Seocho District, one mixed-use apartment complex that went to auction was sold, and the success rate was 100%.
In these areas, cases are emerging in which winning bids are set above market prices. On the 19th of last month, a 157㎡ unit at Hyundai Hyperion, a high-end mixed-use complex in Mok-dong, Yangcheon District, was sold for 3.88999 billion won, which is 110% of the appraised value (3.55 billion won). That price is about 400 million won higher than the Sept. sale price of 3.46 billion won. On the 20th of last month, Daewoo Dioville Prime in Seocho District sold for 1.2312 billion won. It exceeded the appraised value of 1.22 billion won, recording a sale-to-appraisal ratio of 102.43%.