Redevelopment of the Yeongdeungpo-gu area is gaining momentum as Seoul City drastically increases the volume ratio of semi-industrial areas. As a result, it is expected that the Mullae-dong, Yangpyeong-dong, and Dangsan-dong areas, which have been delayed due to low volume ratio regulations for over 30 years, will rapidly transform into high-rise apartment complexes.
According to the maintenance industry on the 1st, reconstruction and redevelopment complexes in semi-industrial areas in Yeongdeungpo-gu are changing their maintenance plans one after another. Shindong-A Apartment in Yangpyeong-dong is pursuing a plan to increase the existing reconstruction plan of 563 households on the 30th floor to 777 households on the 49th floor. The number of households has increased by 214 households. Kukhwa Apartment is also changing its maintenance plan to expand from 354 households on the 29th floor to a great location with 662 households on the 42nd floor. It is analyzed that this is due to Seoul City's announcement that it will drastically reduce the upper limit of the volume ratio of apartment houses in semi-industrial areas from 250% to 400% starting in March of this year.
As the volume ratio was raised to 400%, discussions on reconstruction are picking up speed. Meanwhile, discussions on reconstruction were delayed due to lack of business performance because the existing volume ratio was only at the beginning of 200%. CEO of Brokerage A in Mullae-dong, Yeongdeungpo-gu, explained, “Since Gukhwa Apartment is a 29-story high-rise complex, it is a negative business with almost no general sales even if it is reconstructed at a 250% volume ratio,” and “in reality, if the only answer is remodeling, 300 households can increase, making reconstruction possible, and union members' contributions can be greatly reduced.”
Yeongdeungpo-gu has the largest share of semi-industrial areas among Seoul's 25 autonomous regions. 25% of Seoul's total semi-industrial area is located in Yeongdeungpo, and 5 square kilometers, which is about 30% of the area of the district, is designated as a semi-industrial area. The location is good, with Yeouido Financial Center and the Han River in between, but maintenance projects have been destroyed several times due to low volume ratio regulations. As a result of this increase in volume ratio, Dangsan-dong Hanyang Apartment, Dangsan Hyundai 3rd Apartment, and Mullae Doosan Weave are also requesting rapid integrated planning advice and are preparing a high-density development plan with a volume ratio of close to 400%. According to Yeongdeungpo-gu, there are about 30 apartment complexes in semi-industrial areas that have been under reconstruction for over 30 years, and redevelopment is currently underway at 9 locations.
The market price is also on the rise. The 102 square meters of Mullae-dong Gukhwa Apartment broke the reported price in August and was traded at 1.39 billion won, and the 72 square meters of Shindong-a Apartment in Yangpyeong-dong also broke the reported price from 600 to 700 million won last month from the actual transaction price of 600 to 700 million won last month. This result reflects expectations of an increase in volume ratio. In the case of the 88 square meters of Dangsan Hanyang Apartment, it was sold for 1.18 billion won in September of this year. CEO of Brokerage B in Dangsan-dong explained, “Due to heightened expectations for new construction, homeowners don't sell much,” and “the current price of Dangsan Hanyang apartments for sale amounts to 1.3 to 1.6 billion won.” He then explained, “As loan regulations become stronger due to measures 6 and 27 and 10 and 15, etc., the actual transaction price cannot keep up with the price, but the declared price is changed once the transaction is signed,” and “there are many inquiries from prospective buyers showing interest, such as office workers commuting to Yeouido and investors aiming for market profit.” As the sales price of major reconstructed complexes such as Yeouido Pilot and Hanyang Apartment exceeded 3 billion won and the entry barrier became too high, the Yeongdeungpo semi-industrial area, which will be transformed into a new construction site, is emerging as a realistic alternative.
Expectations for the market price after completion are also rising. The 49-story high-rise complex in Yangpyeong-dong and Dangsan-dong is estimated to have sufficient potential to act as a blacksmith in the southwestern region until the reconstruction of the new downtown of Mokdong is in full swing. CEO of C Brokerage in Yeongdeungpo-gu explained, “Yeongdeungpo has the same potential as Seongsu-dong due to its accessibility to the Han River, flat land conditions, and clear direct proximity demand from Yeouido,” and explained, “However, since most of the complexes that are undergoing maintenance plan changes are still in the early stages of the project, it is expected that it will take 5 to 6 years or more until construction actually starts.”
Construction costs are rising due to the recent surge in construction materials and labor costs, and it is also pointed out that the reduction in contributions due to the increase in volume ratio may be offset in part. As of this year, the construction cost index has risen by about 29% in 4 years. CEO of Brokerage C said, “Although development expectations have increased due to the reduction in volume ratio, it is important to note that construction costs such as labor costs are likely to rise in the meantime,” and “Nevertheless, it is positive in the long term because the advantages of the location behind Yeouido are clear.” A representative of a nearby D brokerage firm said, “The final price will depend on the size of the complex and the setting of sales prices, etc.,” and “in the case of Dangsan, securing a view of the Han River can also be an important variable.” He also added, “Yeongdeungpo has plenty of potential to become an emerging luxury residential area if the expansion of transportation and education infrastructure follows.”
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