Applications Reveal Shortfall for Eunma Penthouses, the 'Final Boss' of Gangnam Redevelopment

[Financial News] Members of Daechi-dong's Eunma Town Apartments, a symbol of redevelopment in Seoul's Gangnam area, have turned in large numbers away from larger units and toward more practical homes. The trend appears to reflect a growing reluctance, even among wealthy property owners, to take on unnecessarily larger homes as they face additional contributions of several billion won, lending restrictions and tax burdens.
According to the redevelopment industry on the 2nd, the Daechi-dong Eunma Town Apartments redevelopment association accepted unit applications from its members through the 30th of last month. The 143-sq-m exclusive-area penthouse units (56 in total) were undersubscribed, with only 10 members listing them as their first choice. Even including the 8 second-choice and 7 third-choice applicants, there were just 25 applicants, leaving 31 units—more than half of the total—unclaimed.
First-choice applications for the medium-to-large unit types also fell short of the number of units available. The 118-sq-m units (336 in total) drew 159 applicants, less than half the supply, while the 128-sq-m units (209 in total) drew 203 applicants, leaving 6 units unclaimed.
This marks a shift from the unit-size preference survey the association conducted among members in November last year, just a year ago. At the time, as many as 50 members selected the 143-sq-m penthouse.
The 118-sq-m and 128-sq-m units also drew more interest than they do now, with 216 and 305 members selecting them, respectively. Twelve members expressed interest in the 286-sq-m exclusive-area penthouse, whose additional contribution was estimated at up to 9.73 billion won, prompting the association to consider increasing the supply of larger units.
By contrast, demand has risen further for the 84-sq-m exclusive-area units (1,354 in total), known as the country's standard-size units. While 1,473 members selected 84-sq-m units in the survey a year ago, the number rose by more than 400 to 1,885 in the current unit application round. The 59-sq-m and 109-sq-m units, also generally considered popular choices alongside the standard-size units, likewise drew more first-choice applicants than the number of units allocated.
The association has decided to revise the unit mix so that as many members as possible can get their preferred unit size. An association representative explained, "There have been changes as members who preferred larger units have changed their minds and opted for 84-sq-m units," adding, "We plan to adjust the number of units in each size based on the results of this application round and incorporate them into an alternative design that is expected to take shape around next summer." The association is also preparing a design for the 286-sq-m exclusive-area penthouse, which was excluded from this round of applications, together with the construction company. Once finalized, it plans to conduct an additional survey and accept applications.
The main reason members have come to avoid larger units is the hefty additional contribution required. The contribution for an Eunma Town Apartments penthouse (143-sq-m exclusive area) is estimated at 3.4 billion to 3.7 billion won. For a 286-sq-m unit, it would amount to 9.4 billion to 9.7 billion won.
Members would also need to pay an additional 1.6 billion to 2.3 billion won for the 118-sq-m and 128-sq-m units, depending on the size of their existing homes. This is due to higher construction costs and increased financing costs from the prolonged project being passed on to sale prices.
Kim Je-gyeong, head of Tumi Real Estate Consulting, said, "Unlike in places such as Banpo, where preferences for larger units remain strong, Eunma's member sale prices are so high that there is no longer an incentive to pay a huge additional contribution to move into a larger unit." He added, "Members weighed expected returns against their investment and considered resale liquidity, then lowered their sights to the safest and most proven option: an 84-sq-m unit."
At The H Banpo 124 in Seocho District (Banpo Jugong Complex 1, zones 1, 2 and 4), which is about to launch public sales, association members snapped up the larger units, leaving 1,358 84-sq-m units for public sale. An Eunma Town Apartments association representative said, "Our top priority is reducing additional contributions," adding, "We are continuing to identify and pursue ways to ease the burden on our members."
[email protected] Jeon Min-gyeong Reporter