New Towns: Early Presale Complexes Prove Their Worth... "Prices Rise 5.5-Fold from Presale Prices"

[Financial News] As it takes a long time for a new town to complete its urban functions, the "first presale complexes" supplied during the early stages of development often become market-leading complexes that drive local prices over time. With presale prices rising steeply in recent years, the performance of early complexes in past new towns is being reexamined.
According to industry sources on the 1st, the 84-square-meter unit at 'Dongtan Station Sibeom Woongnam Firstville,' which was offered in the first simultaneous presale in 2012 in Dongtan 2 New Town in Hwaseong, Gyeonggi Province, had a highest presale price of KRW 342 million at the time. It traded for KRW 1.86 billion in July this year, meaning the transaction price was more than five times the highest presale price and marking an increase of approximately KRW 1.518 billion.
The 83-square-meter unit at 'Botdeul Maeul 1 Complex Sinmiju,' the first privately developed presale complex in Pangyo New Town, which was presold in 2006, also traded for KRW 2.09 billion—more than five times its presale price of KRW 393.2 million. The 101-square-meter unit at Gwanggyo New Town's 'Jayeon & Xi 2 Complex,' presold in 2010, also rose by more than KRW 1.3 billion from its initial presale price and traded in the KRW 1.85 billion range. Early presale complexes in new towns have continued to command high premiums, supported by strong locations and infrastructure growth.
The reason these early presale complexes are valued so highly is that transportation, commercial and business facilities are expanded in stages as a city develops, while presale prices and construction costs have also been rising steeply.
According to the Korea Housing & Urban Guarantee Corporation (HUG), the average presale price per square meter for private apartments in the Seoul metropolitan area over the most recent one-year period as of August this year was KRW 10.935 million, up approximately 31.6% from two years earlier, when it stood at KRW 8.307 million. The Construction Economy Research Institute of Korea also said that the construction cost index rose 5.1% year on year in May this year, raising expectations that the price burden for new apartments will grow further.
Against this backdrop, new supply complexes in third-generation new towns scheduled to enter the market in earnest this fall are drawing interest from prospective homebuyers. Bando Construction plans to presell the mixed-use residential-commercial complex 'Gyeyang New Town Caiiv Yuboraa' in Blocks AC3 and AC4 of Gyeyang New Town in October. The development will comprise 1,110 households with exclusive areas of 84, 92 and 93 square meters. A variety of community facilities and a care center are planned, offering greater convenience for childcare.
A consortium of Korea Land and Housing Corporation (LH) and Namkwang Construction will supply 'Bucheon Daejang Howstory Descent,' a public housing development with private-sector participation, in Block A-2 of Bucheon Daejang Public Housing District in October. The complex will have 548 households, with exclusive areas ranging from 59 to 84 square meters.
In addition, 379 New:Home sharing-type units are set to be supplied in Block A-17 of Namyangju Wangsuk Public Housing District, likely drawing strong interest from people seeking affordable homeownership.

[email protected] Jeon Min-kyung Reporter