Ten of 12 withheld units at Raemian La Grande, a large apartment complex in Imun-dong, Dongdaemun District, Seoul, have found buyers. Although some say the withheld-unit market has lost steam due to tighter lending rules, demand is still flocking to popular complexes with strong locations and price competitiveness. In particular, the 59-square-meter exclusive unit drew about half of all bidders for a single offering and was awarded at a price 170 million won above the base price.
According to the maintenance industry on the 11th, the opening of bids for Raemian La Grande's withheld units held on the morning of the 9th resulted in 10 of 12 units being awarded. The lots offered this time were one 59-square-meter exclusive unit, two 84-square-meter units, seven 99-square-meter units, and two 114-square-meter units. Among these, one 84-square-meter unit and one 114-square-meter unit drew no bids and failed to sell.
Raemian La Grande is a complex created through the redevelopment of the Imun 1 district. It consists of 39 buildings with five basement levels to a maximum of 27 above-ground floors, totaling 3,069 households, and residents moved in this January. Even within the Imun–Huigyeong New Town, a mini new-town-scale residential area of 14,000 households, it is considered one of the largest complexes.
This withheld-unit bidding was conducted as a highest-price competition. A total of 31 people participated, with an average competition rate of 2.6 to 1. The unit type that drew the most attention was the 59-square-meter exclusive. A sales official said, "About half of the 31 bidders bid for the 59-square-meter exclusive," and noted, "The base price was set low compared with market levels, and the view conditions of the building are good, which appears to have drawn demand."
The 59-square-meter exclusive unit ultimately went for 1.5201 billion won, about 170 million won above the base price of 1.35 billion won. While above the base price, some say it still has an edge compared with nearby market levels. An official at a licensed real estate agency in Imun-dong said, "Given that this complex's 59-square-meter exclusive units go for around 1.55 billion to 1.6 billion won, the winning bidder bought at a relatively low price."
According to the actual transaction price disclosure system of the Ministry of Land, Infrastructure and Transport, a 59-square-meter exclusive unit at Raemian La Grande traded for 1.499 billion won in April. There is currently one listing on the market for the same size, with an asking price of around 1.6 billion won.
Most other unit types also sold above their base prices. The highest winning bid for the 99-square-meter exclusive was 1.8709 billion won, about 50 million won higher than the 1.82 billion won base price. The 84-square-meter exclusive went for 1.6651 billion won, and the 114-square-meter exclusive went for 2.1133 billion won.
Withheld units are lots that reconstruction or redevelopment associations set aside instead of offering for general sale to prepare for potential lawsuits, area settlements, and additional expenses during the project. Typically, associations sell them via public bidding, and the highest bidder wins.
At one time, withheld units drew investment demand because they were not subject to land transaction permit regulations, allowing so-called "gap investment" by purchasing with a jeonse tenant in place. But after the June 27 measures last year, a self-occupancy requirement was imposed when taking out a mortgage loan, which sharply reduced their investment appeal. On top of that, as lending rules tightened, the market became difficult to enter without ample cash on hand.
The cash burden is also heavy. After winning a withheld unit, the buyer typically pays 10% down first and must settle the balance within about a month, a short window. For this reason, some complexes in the withheld-unit market have recently seen "zero-bid" auctions with no participants. Even as the overall withheld-unit market has cooled, demand is selectively flocking to complexes with good locations and lots with price competitiveness.
Industry officials see the success of the Raemian La Grande withheld-unit sale as a result of location and price competitiveness. A sales industry official said, "Imun-dong in Dongdaemun District has good access to the city center, and the Imun–Huigyeong New Town development is raising residential preference in the area," adding, "The lower base price compared with market levels and the large-complex premium appear to have combined to drive the strong withheld-unit bidding."