Listings with a minus premium are coming on the market one after another in a new mixed-use residential-commercial complex in Yongdu-dong, Dongdaemun District, Seoul. The complex avoided designation as a land transaction permit zone, but conflicts between residents and the developer and builder have not stopped. Residents are demanding fixes, saying the separation of commercial and residential areas and trash facility installations are inadequate, and, with no sign of resolution, some are trying to sell below the pre-sale price.
According to the real estate industry on the 21st, an urban-type living dwellings unit of 41 square meters exclusively for 'Hillstate Metrovle Cheongnyangni' in the area of 26-14 Yongdu-dong, Dongdaemun District, Seoul, is listed for 650 million won. Compared with the pre-sale price in the 800 million won range, that amounts to about a 150 million won minus premium. A high-floor 48-square-meter exclusive unit also hit the market at 864.6 million won with a 30 million won minus premium. In addition, listings with extra conditions such as forfeiting the down payment and price negotiation available are lining up to find new owners.
This mixed-use complex sits at 26-14 Yongdu-dong, Dongdaemun District, Seoul, with six basement levels and 28 above-ground floors, and consists of 288 urban-type living dwellings units and 96 officetels. For the urban-type living dwellings units, when applications were received in Feb. 2022, the average competition rate reached double digits at 47 to 1. The highest competition rate soared to 899 to 1, drawing attention in the real estate market.
Hillstate Metrovle Cheongnyangni is one of the complexes that avoided designation as a land transaction permit zone under the government's strong regulations announced on Oct. 15. If designated a land transaction permit zone, buyers must meet owner-occupancy requirements, making "gap investment," purchasing with a jeonse tenant in place, virtually impossible. Urban-type living dwellings follow the Housing Act like apartments but must be under 84 square meters of exclusive area and fewer than 300 units. By sidestepping land transaction permit zone rules, buyers can use jeonse deposits when signing sales contracts, a benefit that makes the funding burden relatively lighter than for apartments.
Despite being a new building in a subway-accessible area and free from land transaction permit zone rules, the reason minus-premium listings continue is mainly the conflict 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 corridor leading to the fourth-floor residential (urban-type living dwellings, officetel) community facilities.
A resident, identified as A, said, "Of the 62 commercial spaces, only four to five have been leased so far, but if all commercial tenants move in and all outdoor units operate, residents using the residential community facilities will have to endure the noise, dust and heat alone," adding, "Commercial outdoor units should ideally be installed in the commercial facilities on floors 1 to 3."
In fact, on the terrace leading to the gym facilities exclusively for residents of the urban-type living dwellings and officetel on the fourth floor of Building 101, five large commercial outdoor units were installed, big enough to block the outside view. Commercial outdoor units were also placed right next to the area with an emergency evacuation route. Residents argue that in an emergency, the commercial outdoor units could make the evacuation route less visible, increasing the risk of problems.
The on-site household waste handling facilities are another issue residents raise. The path to the household waste facility on the first floor of the complex was so narrow that only two people could barely pass at once, which they say does not meet architectural review standards requiring smooth vehicle access. As of Feb. this year, the Dongdaemun District Office architectural committee's review standards state that household waste facilities must allow "smooth vehicle access and be convenient for residents to use."
There were also concerns that the space for handling household waste from a total of 384 residential units and 62 commercial spaces is too small, and once both the commercial and residential spaces are fully occupied, trash will overflow and resident inconvenience will worsen.
Hyundai E&C, the builder, said about commercial outdoor units being placed on the terrace leading to the residential area, "The terraces on floors 2 to 3 are included in the commercial area, making access difficult, whereas the terrace on the fourth floor is an external space (pilotis) allotted to the entire building, so there is nothing wrong with installation," adding, "The outdoor unit locations were spaces secured in advance during the design and permitting stages in accordance with relevant standards."
Hyundai E&C also said regarding the location and size of the household waste storage, "The household waste storage is also approved through permitting and reflects various practical conditions, including securing collection vehicle circulation on the ground level, pedestrian safety, and constraints in architectural design," adding, "To minimize resident inconvenience, we are taking various measures such as installing air guides, plantings, partition walls, and air conditioners in elevators (paid option)."
An official with Dongdaemun District said, "There is no issue because the project has already passed the Seoul City architectural review and received completion approval," adding, "There are no separate rules on the floor 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 fourth-floor terrace where the commercial outdoor units are located is also a common area counted as service floor area, so it cannot be considered facilities exclusively for the urban-type living dwellings and officetel."