The reserved dwellings at Cheongdam LEEL, a reconstruction complex in Cheongdam-dong, Gangnam-gu, Seoul, were put up for bidding at a price more than 1.1 billion won higher than the previous attempt despite repeated failures. Reserved dwellings are units that reconstruction or redevelopment associations withhold from sale to prepare for contingencies such as lawsuits.
According to the maintenance industry on the 28th, the reconstruction maintenance project association for Cheongdam Samik Apartment (Cheongdam LEEL) dwellings in Cheongdam-dong, Gangnam-gu, Seoul, is conducting an open bid for 10 reserved apartment units from on the 24th to May 8. This is the third bid for Cheongdam LEEL's reserved dwellings.
Previously, at the end of December last year, the association put four 84-square-meter exclusive-use units up for bid, but all failed to attract buyers. The base bid range was 5.96 billion to 5.98 billion won. In February, it listed a total of 12 units, including eight 84-square-meter exclusive-use units and four top-floor penthouses, but only two 84-square-meter B and C type units were sold. The two units sold for 5.2 billion won and 5.118 billion won, respectively. The association sells the reserved dwellings through a highest-bid method, and at that time the base bid range was between 5 billion and 5.1 billion won.
For the third bid, the base bid for six 84-square-meter exclusive-use units is up to 6.212 billion won, about 1.1 billion won higher than the previous base. An association official said, "The units with higher base bids are new inventory that was not disclosed in the last bidding," and added, "We calculated the base bid by taking the arithmetic average of the appraisals from two appraisal firms. We reflected a premium for units with a Han River view."
The appraised value of reserved dwellings is calculated based on the officially assessed land price while reflecting nearby real estate transaction prices and other factors. An 84-square-meter exclusive-use unit at Cheongdam LEEL sold for 6.7 billion won (16th floor) on Feb. 12. Still, even after reflecting market prices, critics say the base bid is high considering the repeated failures and the recent market conditions. In addition, the Cheongdam LEEL association has not yet settled construction costs. An industry official said, "The Cheongdam LEEL association still has not paid about 130 billion won in construction costs to Lotte Construction, the builder. With the issue of the association head's dismissal also in play, they are acting tough."
Generally, when a reserved-dwelling sale fails, the association tends to lower the price in the next bid. In the case of the reserved dwellings for The Sharp Songpa Lumistar (Garak Hyundai 5th) in Garak-dong, Songpa-gu, this January, the base bid in the second round was set 1% to 11% lower than the initial presale price.
Another industry official said, "After most fire-sale listings from multiple-home owners were absorbed by the market and as falling apartment prices in Gangnam showed signs of rising, it appears they are setting higher base bids for reserved dwellings," adding, "I also understand there is strong resident opposition to pricing reserved dwellings below market value."