Listings with a minus premium are coming on the market one after another at a new mixed-use residential and commercial complex in Yongdu-dong, Dongdaemun-gu, Seoul. The complex avoided the designation as a land transaction permission zone, but conflicts between residents and the developer and builder have not let up. Residents are demanding corrections, saying the separation of commercial and residential spaces and the installation of trash facilities are inadequate. With no sign of a resolution, some are trying to sell at prices below the presale price.
According to the real estate industry on the 21st, a 41-square-meter exclusive-use urban lifestyle dwellings unit for sale at Hills State Metroble Cheongnyangni, located at 26-14 Yongdu-dong, Dongdaemun-gu, Seoul, is on the market for 650 million won. Compared with the presale price in the 800 million won range, it carries about a 150 million won minus premium. A high-floor 48-square-meter exclusive-use unit has also been listed at 864.6 million won with a 30 million won minus premium. In addition, listings with conditions such as forfeiture of the down payment and negotiable prices are lining up to find new owners.
This mixed-use complex stands at 26-14 Yongdu-dong, Dongdaemun-gu, Seoul, with six basement levels to 28 above-ground floors, comprising 288 urban lifestyle dwellings units and 96 officetel units. For the urban lifestyle dwellings, applications in Feb. 2022 drew an average competition ratio of 47 to 1, reaching double digits. The highest competition ratio soared to 899 to 1, drawing attention in the real estate market.
Hills State Metroble Cheongnyangni is among the complexes that avoided the government's designation of a land transaction permission zone, a tough restriction announced on Oct. 15. Once designated as such a zone, gap investing, or buying with a tenant in place using a jeonse lease, is virtually impossible because actual residency requirements must be met. Urban lifestyle dwellings follow the Housing Act like apartments but must be under 84 square meters of exclusive area and under 300 units. Because urban lifestyle dwellings do not count toward the number of dwellings, they can receive real estate tax benefits, and by sidestepping the land transaction permission zone restrictions, the funding burden is relatively lower than for apartments.
Despite being a new building near a transit hub and exempt from land transaction permission zone regulations, the main reason listings carry a minus premium is cited as conflicts between residents and the developer and builder over on-site facilities.
Residents pointed out that of the 17 outdoor air-conditioning units used by 62 commercial spaces, 15 are clustered in the hallway leading to the community facilities on the 4th floor for residential use (urban lifestyle dwellings and officetel).
Resident A said, "Of the 62 commercial spaces, only four to five are currently leased, but if all the tenants move in and all outdoor units run, residents using the residential community facilities will have to bear the noise, dust and heat entirely," adding, "Commercial outdoor units should preferably be installed on the 1st to 3rd floors where the commercial facilities are."
In fact, five large commercial outdoor units were installed on the terrace leading to the fitness facility exclusively for residents of the urban lifestyle dwellings and officetel on the 4th floor of Building 101, big enough to block the outside view. Commercial outdoor units were also placed right next to where the emergency evacuation route is installed. Residents argue that in an emergency, the commercial outdoor units could make the evacuation route less visible, increasing the likelihood of problems.
The complex's household waste disposal facilities are another issue residents point out. The path to the household waste facility on the first floor is so narrow that only two people can barely pass, which they say does not meet the architectural review standard that vehicle access should be smooth. As of Feb. this year, the Dongdaemun-gu Office Architectural Committee's review standards stipulate that household waste facilities must allow smooth vehicle access and be convenient for residents to use.
There were also opinions that the space handling household waste from a total of 384 residential units and 62 commercial spaces is too small, and once both commercial and residential move-ins are complete, overflowing garbage will worsen inconvenience for residents.
Hyundai E&C, the builder, said regarding the placement of commercial outdoor units on the terrace leading to the residential area, "Terraces on the 2nd to 3rd floors are included in the commercial area, making movement difficult, whereas the 4th-floor terrace area is an external space (pilotis) allotted to the entire building, so there is no issue with installation," adding, "The outdoor unit installation locations are spaces secured in advance during the design and permitting stages in accordance with relevant standards."
Hyundai E&C also said about the location and size of the household waste storage, "The household waste storage is also permitted, and it reflects various practical conditions such as securing routes for collection vehicles at ground level, traffic safety and architectural design constraints," adding, "To minimize inconvenience to residents, we are taking various measures such as installing air guides, plantings, partition walls and air conditioners in elevators (paid option)."
An official at Dongdaemun-gu also said, "There is no problem because it has already passed the Seoul city architectural review and received completion approval," explaining, "There are no separate regulations on the area of household waste storage facilities, and the rule that vehicle entry and exit must be possible is a recommendation, so it cannot be enforced." The official added, "The 4th-floor terrace where the commercial outdoor units are located is also a common service area, so it cannot be considered a facility exclusively for urban lifestyle dwellings and officetel."