▲ A low-rise residential area in Seoul with dense villas. (Reporter Park Jong-hwa. pbell@)
Public redevelopment projects are heating up the multi-family and multi-family housing (villa) market in Seoul. Not only places where public redevelopment is confirmed, but also candidate sites increase in price every day.
A villa in Ahyeon-dong, Mapo-gu, Seoul, rose 50 million won in price in one month. This villa, with a dedicated area of 45m2 and land area of 29m2, was for sale at the end of last year for 750 million won. The landlord raised the price to 780 million won at the beginning of this week and is calling 800 million won on the weekend.
Raising the price of villas in this area is the expectation of public redevelopment. Public redevelopment is a system that provides benefits such as exemption from the pre-sale price cap, increase in floor area ratio, and simplification of permits and permits for redevelopment projects with publicity such as participation in public enterprises and donations for rental housing. Since the introduction of the public redevelopment project was announced, the villa market is swelling with anticipation that new apartment tenants will be available for each house.
Ahyeon District 1, where Villa A belongs, also participated in the public redevelopment project last year. Ahyeon District 1 was designated Ahyeon New Town in 2003, but development has been delayed for nearly 20 years. Ahyeon I-Park, which is adjacent to Ahyeon District 1, currently costs 40 million to 50 million won per 3.3 square meter, and 1.5 to 1.6 billion won for exclusive use of 84 square meters.
The same is true of Jangwi-dong, Seongbuk-gu, Seoul, where villa prices rose every day due to anticipation of public redevelopment. W villa in Jangwi-dong (62㎡ for exclusive use, 30㎡ for land area) also rose 40 million won in two weeks. Products that were sold at 490 million won in the middle of this month are now priced up to 530 million won. In 2018, the last transaction was worth less than 200 million won.
The former Jangwi District 8, where W Villa belongs, is also trying to attract public redevelopment projects. In the Jangwi New Town in the Jangwi-dong area, not only District 8, but also District 9, District 11, and District 12 started public redevelopment. These are places that were lifted from the maintenance zone due to internal conflicts with Seoul city policies while promoting redevelopment in the past. These areas are aimed at’resurrection’ by attracting public redevelopment projects.
The villa market fever over public redevelopment was also revealed earlier this month when the Seoul Metropolitan Government and the Ministry of Land, Infrastructure and Transport announced the primary public redevelopment project site. In some areas, the demand for investment was so tight that the price of a semi-basement villa exceeded 1 billion won. The Seoul Metropolitan Government designated these areas as land transaction permission zones within a week, and blocked transactions other than the purpose of living.
In areas waiting for the announcement of the second project site, such as Ahyeon District 1 and Jangwi District 8, the desire for public redevelopment is greater than that of the first project site. Unlike before the first project site was selected for the existing maintenance area, the second project site, like the two areas, received public offerings for the planned maintenance area, the new promotion area for redevelopment, and the area for canceling the maintenance project. This means that there are many places where it is difficult to carry out projects except for public redevelopment. As an investor, if you prematurely invest in a villa that is a candidate for public redevelopment and then fall out of the selection match, you may be disappointed. The Seoul Metropolitan Government and others plan to announce the second candidate for public redevelopment in late March.
It is not just investment demand that raises villa prices. As apartment sales and rental prices have soared, the common people who are tired of preparing my home are turning to villas. According to KB Kookmin Bank, last year, the median total price for apartment houses in Seoul (the price in the middle when listed in order of price) rose 7.1% from 262.61 million won at the beginning of the year to 285.63 million won. In terms of absolute price, it is cheaper than other houses in Seoul, but the rate of increase is higher than that of apartments that have increased by 3.8% or detached houses that have increased by 5.6%. Young-jin Ham, head of Jikbang Big Data Lab, said, “It should be seen that the recent rise in villa prices is not only a favorable development, but also a growing demand to buy even mid-priced villas that are undervalued as apartment prices and rental prices have risen sharply.
“If you want to buy a villa, you need to clarify the purpose of the purchase. If you buy a villa for investment, you have to carefully weigh how the maintenance business is being promoted and how much you own the land,” said Ham Rapjang.