Reserved apartment units at major rebuilding and redevelopment complexes in Seoul are coming to market at prices that exceed twice their original presale levels. With construction costs rising and supply tight in prime Seoul locations, new apartment prices have climbed, prompting associations to set sale prices that reflect surrounding market rates — and raising the question of whether the units will fetch those figures.
The redevelopment association for Shinbanpo 21st Apartment is accepting open competitive bids through the 30th of this month for two reserved units at Hauterre Banpo in Seoul's Seocho District, according to industry sources on the 18th. The units on offer each measure 130.6 square meters of exclusive floor area, with minimum bid prices of 7.415 billion won (about $5.1 million) and 7.55 billion won (about $5.2 million).
Reserved units are homes that a redevelopment association sets aside separately from its general presale allocation as a buffer against litigation and other contingencies. They are typically sold near the end of a project to raise additional funds. Because the sales are conducted as auctions in which the highest bidder wins, prices can rise further if competition intensifies.
Hauterre Banpo, built under POSCO E&C's high-end brand, comprises 251 units in total. In April, 86 units ranging from 44 to 113 square meters were offered in a general presale and sold out at an average of 710 applicants per unit. Under the price cap on new homes in effect at the time, 84-square-meter units were offered at up to 2.7565 billion won and 113-square-meter units at 3.6689 billion won. The minimum bid prices for the reserved units are more than double the highest presale price. Even on a simple per-area calculation, a 130.6-square-meter unit would have carried a presale price of roughly 4.2 billion won — meaning the association has set a figure more than 3 billion won higher in just six months.
Behind the high prices are sharply elevated asking prices. According to Naver Real Estate, 113-square-meter units at Hauterre Banpo are listed at 5.2 billion to 6.5 billion won, while a 150-square-meter duplex penthouse is asking 10 billion won. One industry official said it is hard to call the reserved-unit prices excessive, "since general presale prices at Gangnam rebuilding complexes are set below surrounding market rates because of the price cap." The official added: "Still, there have been no actual transactions yet, and demand for high-priced apartments has weakened under lending restrictions, so we will have to see whether deals close at these levels."
Similar cases are emerging at other new complexes in Seoul. Olympic Park Foreon, the rebuilt Dunchon Jugong complex in Gangdong District, is accepting bids through the 2nd of next month for one reserved unit each at 84 and 109 square meters. The minimum bid price for the 84-square-meter unit is 2.6172 billion won, roughly double the 1.3 billion won range at the initial presale in late 2022. The minimum bid for the 109-square-meter unit is 3.087 billion won. Both unit types, however, have traded this year at 3.195 billion won and 3.575 billion won respectively, putting the minimum bids more than 500 million won below market prices.
Yeongdeungpo Xi Dignity, offered at around 1.1 billion won in its general presale, is selling three reserved units of 84 square meters at 2.5 billion won, more than double the presale price. Bids are being accepted through the 22nd. Occupancy rights for the same unit type traded at 2 billion to 2.2 billion won in the first half of this year, suggesting the asking price is slightly above market. Another industry official said associations that set reserved-unit prices above market rates can lower them and rebid if a sale fails. "The results of these auctions should offer a read on where prices are heading for new Seoul apartments above 2.5 billion won, the ceiling for lending restrictions," the official said.