Mokdong Union members '160 million more' if rental obligations are lowered... deregulation starts [AI Prism*Real Estate Investor News]

▲AI Prism* Customized Economic Briefing* Editor's Note: 'AI PRISM' (Analytical Report & Insight Summarizing Media) is an 'artificial intelligence (AI) -based customized news recommendation and summary service' developed with support from the Korea Press Foundation. We select and provide 6 customized news items for each type of reader

? Mokdong refund 150 million vs Changdong 7.7 trillion [AI PRISM x D? LOG]

[Key Issues Briefing]

■ Reconstruction project efficiency: As the mandatory supply ratio for reconstructed rental housing was reduced from 50% to 30%, it was found that the refund amount per household for Mokdong New Downtown Apartment Complex 1 to 3 increased from a minimum of 110 million won to a maximum of 160 million won. The government and Seoul City are discussing ways to reduce the mandatory rental housing supply ratio to 30%, which is the minimum legal level, and it is expected that the pace of reconstructed complexes across Seoul will accelerate when the ordinance is revised.

■ Brand conflict: Reconstruction cooperatives are in conflict with construction companies demanding the application of high-end brands instead of general brands. Seoul's Sindang District 8 terminated the construction contract with DL E&C after the Acro brand request was rejected, and the move-in period was postponed for 5 years from 2024 to 2029. There are concerns that the application of high-end brands may increase contributions due to additional costs such as high-end finishing materials and construction materials.

■ Northeast region development: Seoul City invests a total project cost of 7.7 trillion won in the Changdong Depot area in Nowon-gu to create an economic center in the Northeast region. With a city budget of 110 trillion won and private capital of 6.6 trillion won, private investment of 3.8 trillion won is expected to be made in Seoul Digital Bio City, which is scheduled to begin construction in 2028. Changdong Station is likely to emerge as a transportation center in the Northeast region due to the opening of the Seoul Arena and GTX-C line, which is scheduled to open in 2027.

[News of interest to real estate investors]

1. When the rent ratio is 50% → 30%, the refund for Mokdong 1 to 3 complexes increased by 150 million

If the mandatory rental housing supply ratio for the Mokdong Complex 1 to 3 maintenance project is reduced from 50% to 30%, the owner's reconstruction refund will increase from a minimum of 110 million won to a maximum of 160 million won. In the case of Mokdong Complex 1, the proportionality rate rises 7.6 percentage points from 102.21% to 109.8%, and when owners of exclusive 88 square meters sell their exclusive 84 square meters after reconstruction, the refund amount increases by 157 million won from 411.48 million won to 568.22 million won. The proportional ratio for complex 2 and 3 also increases by 7 percentage points or more, respectively. It is reported that if the government and Seoul City reach an agreement, the Seoul Metropolitan Assembly will reduce the rental housing supply ratio for reconstructed complexes by 30% through amendments to the ordinance.

2. “The name of our complex is also high-end”... construction companies are distressed by the demand for a combination

DL E&C opened an in-house brand review committee when the Seongnam Sangwon District 2 Union called for the application of the 'Acro' brand instead of 'e-Peace World'. After Acro River Park in 2016, major construction companies introduced high-end brands, and conflicts have arisen all over the reconstruction site. The construction contract for Sindang District 8 in Seoul was terminated when the Acro brand request was rejected in 2021, and the move-in period was postponed for 5 years from 2024 to 2029. The construction industry points out that when applying high-end brands, contributions may increase due to the increase in the cost of high-end finishing materials and construction materials.

3. A wall of heaven and earth in the northeast region of Seoul... spending 7.7 trillion as a base for future industries

Seoul will invest a total project cost of 7.7 trillion won to establish a future industrial base in the Northeast region. The city's budget is 1.1 trillion won to relocate the Changdong vehicle base, underground construction of the East Intersection Road, and the construction of the Jungnangcheon Bridge, and build the Seoul Arena and Changdong Station complex transit center with private capital of 6.6 trillion won. Seoul Digital Biocity, a high-tech industrial complex, will be built on the site remaining after moving the Changdong Vehicle Base to the Advance Vehicle Base, and SH Corporation will enter the development process from next year with the goal of starting infrastructure construction in 2028. With the opening of the GTX-C line, Changdong Station is expected to become a transportation center in the Northeast region.

[Real estate investor reference news]

4. Up to 30 years in prison for chartering, reading room fraud, etc.

The court sentence for fraud crimes against an unspecified number of people, such as charter fraud, was raised to 20 years in prison, and the maximum sentence for contesting offenders was strengthened to 30 years. Previously, it was difficult to apply specific economic crime laws if the amount of damage per person did not exceed 500 million won, but in the future, even if the amount of damage is less than 500 million won, it is possible to be punished with up to 30 years in prison. In addition, when an electronic device is attached to the perpetrator of a stalking crime, the victim will be able to check the location in real time, and public defense attorney support for victims of specific violent crimes will also be expanded.

5. “If you stay in a local area, you lose money”... the salary jumped 30% on the train bound for Seoul

The income of young people who moved from the nonmetropolitan area to the metropolitan area increased by 22.8% from 24.39 million won to 29.96 million won. The number of young people who did not move from the nonmetropolitan area only increased by 12.1%, and the income growth rate of young people who moved from the metropolitan area to the nonmetropolitan area was only 7.6%. The average income growth rate was higher for women (25.5%) than for men (21.3%), and 34.1% of young people who moved to the metropolitan area showed an upward shift in income. Among young people moving in the metropolitan area, the income quartile ratio decreased from 30.7% to 21.0%, and they entered the middle and upper income groups.

6. Construction and petrochemical companies in a hurry to improve their financial structure... 'Bots' to issue new capital securities

Due to poor construction and petrochemical industries, more and more companies are raising funds by issuing new capital securities. LOTTE E&C issued new capital securities worth 700 billion won, HL D&I (014790) raised 80 billion won, and HD Hyundai Oil Bank raised 400 billion won. New capital securities have the character of a permanent bond because they have no maturity or are longer than 30 years, and can be recognized as capital rather than debt during the accounting process if certain requirements are met. It is estimated that LOTTE E&C's debt ratio will drop from 214.3% to 172%.

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