Dong Hyun Kim's 10-Billion-Won Apgujeong Hyundai... 'Why Is There Nothing Left Even at 15 Billion Won?'

[Financial News] An expert analysis has concluded that it may be difficult to realize a substantial gain in market value on the Apgujeong Hyundai Apartment in Apgujeong-dong, Gangnam District, Seoul, even if it rises to 15 billion won after a future reconstruction. The apartment recently made headlines when Dong Hyun Kim (44), a former combat-sports fighter turned TV personality, bought it for 10 billion won.
According to the real estate industry on the 12th, TV personality Kim Gu-ra and real estate expert Kim Inman, head of the Real Estate Economics Research Institute, took an in-depth look at the viability of the Apgujeong Hyundai Apartment reconstruction project and Kim's purchase on the day before on Gu-ra's YouTube channel, GreeGura.
Last September, Dong Hyun Kim bought a 182-square-meter unit (about 55 pyeong) in Shin Hyundai 12th, Apgujeong-dong, for 10 billion won, and completed the transfer of ownership on the 21st of last month. He drew attention for financing the purchase through what is known as “seller financing”—borrowing about 5 billion won, half the purchase price, directly from the previous owner. However, a unit of the same size sold for 8.8 billion won last month, shortly after his purchase, amid factors including the tax burden, sparking controversy over whether he had bought at a short-term peak.
In response, Kim Gu-ra referred to Dong Hyun Kim's past losses from cryptocurrency investments, saying, “The (investment) pace seems a little off,” but also assessing that “Apgujeong Hyundai may fluctuate in the short term, but will trend upward in terms of scarcity.” He then asked, “Wouldn't the reason he paid 10 billion won to get in be that he expected it to be worth 20 billion won in 10 years?”
Kim Inman was positive about the property from a long-term holding perspective, but offered a sober assessment of its target price and actual profitability. “Given that Apgujeong is one of South Korea's leading affluent neighborhoods, there is no need to be swayed by short-term declines when taking a long-term view of holding for 10 years or more,” he said. “In practical terms, buyers should approach it with a price of around 15 billion won in mind.”
However, Kim said it would be difficult to make a substantial profit even if home prices eventually rose to 15 billion won, once the hefty reconstruction costs, taxes and financing expenses were deducted.
The key variables cited included additional contributions incurred during the reconstruction process and the levy under the Reconstruction Excess Profit Recovery System (REPRS). Kim estimated, “Given that the projected contribution for a 34-pyeong unit in Gangnam's Eunma Apartment is around 460 million won, the additional contribution for a 55-pyeong unit in Shin Hyundai 12th could be 1 billion won at current prices, and rise to 1.5 billion to 2 billion won by the time construction begins in 10 years.” Add the REPRS levy, currently estimated at about 1 billion won, and the actual investment cost alone would exceed 12 billion won.
Annual property taxes and interest costs, as well as capital gains taxes due upon sale, would also be considerable. Kim said, “A 52-pyeong Han River-view unit at Raemian One Bailey in Seocho District has sold for 12 billion won, so if a Han River view is secured, reaching the 14-billion-to-15-billion-won range in the future is possible.” However, he added, “Annual property taxes alone on a home in the 10-billion-won range would come to about 50 million won in 2028. Once seller-financing interest and capital gains taxes are factored in, the profit left in hand would not be substantial even if it sold for 15 billion won.”
[email protected] Moon Young-jin Reporter