An inversion is emerging in which apartment presale prices in non-Gangnam districts of Seoul are surpassing those in Gangnam. As presale prices for the 84-square-meter size—commonly called the "national standard layout"—approach 3 billion won, centered on redevelopment sites not subject to the presale price cap, some say the very price yardsticks of Seoul's apartment market are being shaken.
According to the Korea Real Estate Board (REB) Cheongyak Home on the 22nd, the presale price for the 84-square-meter units at Summit The Hill, supplied by Daewoo Engineering & Construction through the redevelopment of Heukseok District 11 in Dongjak-gu, Seoul, has been set at 2.7194 billion to 2.9782 billion won. This is the highest level on record in Seoul for general presales. The previous high was 2.813 billion won for the 84-square-meter units at "Yeoksam Central Xi" in Yeoksam-dong, Gangnam-gu. A non-Gangnam complex has effectively broken the high-price presale record that had represented Gangnam.
Summit The Hill is a large-scale complex to be built with 30 buildings from six basement levels to 16 above ground, totaling 1,515 households. It is considered a prime location within the Heukseok New Town area. It borders the Han River and is close to Banpo-dong in Seocho-gu, and at one point there was even consideration of adding "Seobanpo" to the complex name. The general presale supply is 432 units of 39 to 84 square meters, and applications will open with special supply on the 26th.
Presale prices around the Noryangjin New Town area are also rising quickly. For ACRO Riversky, supplied by DL E&C through the redevelopment of Noryangjin District 8 in Dongjak-gu, the maximum presale price for an 84-square-meter unit was set at 2.7958 billion won. That is more than 200 million won higher than "La Classe Jaide Fine" (2.5851 billion won), which drew attention as the first presale complex in Noryangjin New Town.
On price alone, they outstrip new complexes in Gangnam recently. The maximum presale price for an 84-square-meter unit at "ACRO de Seocho" in Seocho-dong, Seocho-gu, released in March, was 2.38 billion won. On the same size basis, "Summit The Hill" is up to 600 million won more expensive, and "ACRO Riversky" is about 400 million won more.
The construction industry sees the application of the presale price cap as the backdrop for this trend. Currently, the cap applies only to the three Gangnam districts (Gangnam, Seocho, Songpa) and Yongsan-gu. In capped areas, limits on land and construction costs apply, so presale prices are typically set about 30% lower than surrounding market levels. In contrast, redevelopment complexes outside Gangnam can reflect surrounding prices, inflation, and construction cost increases relatively freely. Because presale prices can be set through consultation between the association and the contractor, analysis suggests prices higher than in Gangnam are forming.
A representative at a major construction firm said, "There is a strong perception that complexes with excellent locations are likely to see strong subscription demand even with high presale prices," adding, "Lately, there are many cases where the association asks to set presale prices even higher to secure project profitability." The person added, "As prices have surged even outside Gangnam, sentiment is growing within associations that 'we must raise presale prices to cover project costs.'"
Experts argue that a government-level review of presale prices overall is necessary. Seo Jin-hyung, a professor in the Department of Real Estate Law and Administration at Kwangwoon University, said, "It is hard to accept as anything but a market distortion that presale prices for apartments outside Gangnam are rising higher than in Gangnam," and added, "Even if there are factors such as rising construction and land costs, presale prices are climbing too steeply, so a systematic government-level review is needed."