Some speculative forces targeting apartment occupancy rights… Reconstruction pledges on the rise after the launch of the Yoon administration
If the apartment complex and desired commercial space are delayed… Concerns over the government’s plan to start construction in 2027
“Voting rights limitation – differential distribution of profits required”
A commercial building in an apartment complex in Seohyeon-dong, Bundang-gu, Seongnam-si, Gyeonggi-do, a first-generation new city on the 4th. A sports center was operating on the basement level. It looks like one commercial building from the outside, but if you look at the real estate registry, it is divided into 32 pieces. The owner, an asset management company, divided one commercial building of about 860 ㎡ into 15-30 ㎡ units. This ‘commercial division’ took place in June 2022. It was a month after the Yoon Seok-yeol government, which pledged to rebuild the first-generation new city, took office.
With the first new town redevelopment pilot district application due at the end of this month, there are concerns that the division of commercial districts could become a trigger for future conflict. The first new town will be operated as an integrated reconstruction method that will create infrastructure such as apartments, commercial districts, roads, parks, and schools in a wide area. However, unlike general reconstruction, consultation with commercial district association members regarding the business plan is essential. There are concerns that if the association members of the split commercial districts each demand apartment sales, the speed will be delayed and the general sales volume will decrease, which could halve the effect of new housing supply.
● ‘Splitting’ that took place just before the introduction of regulations
When this newspaper visited the Bundang area, a representative area among the first new cities of Gyeonggi Province, including Bundang, Ilsan, Pyeongchon, Sanbon, and Jungdong, it found that the case of commercial district splitting was not limited to the Seohyeon-dong commercial district.
A typical example is dividing a commercial space into several parts. In an apartment commercial building in Sunae-dong, Bundang-gu, a 73㎡ commercial space on the second floor was divided into six parts. The division of shares occurred a month before Seongnam City banned the division of shares in September of last year. Baek Jun, CEO of J&K Urban Development, diagnosed, “It appears to be a case of commercial spaces being divided in advance in order to receive apartments at a low price during reconstruction.”
There are also cases where a standalone building was changed to a multi-storey building and then the store was split. A typical target is a kindergarten building. A kindergarten building in an apartment complex in Jeongja-dong, Seongnam-si was changed to a store building in September 2022 and the registration was split into 14. In Sunae-dong, a kindergarten building was split into 24 stores in the same way. A real estate agent in the area said, “This is a property purchased by a corporation, but I am concerned that the store owner will demand a lot of apartments during future reconstruction, which will be an obstacle.”
The real estate industry is analyzing that the members of the commercial cooperatives divided the shares of the commercial buildings into small pieces in order to obtain the right to move in at a lower price than the general sale price during reconstruction. As the other four first-generation new cities, excluding Bundang-gu, prohibited the division of shares only in July of this year, there is analysis that similar problems may occur in other regions as well.
● “Giving prey to some speculative forces”
There are concerns that the government’s planned 2027 groundbreaking and 2030 occupancy date could be delayed by splitting commercial areas in order to sell apartments in the first new towns. Integrated reconstruction has the advantage of efficiently developing the region along with infrastructure, but in situations where the project must be promoted together with commercial areas within the complex and commercial areas in neighborhood living facilities, there are frequent cases of conflicts due to different interests with apartment owners.
Oh Hak-woo, an appraiser at Hana Appraisal, analyzed, “It seems that the government has failed to properly manage the problem of splitting commercial properties while focusing only on the speed and quantity of housing supply, which has left them vulnerable to speculative forces.”
Experts said that it is impossible to rule out the possibility that speculative forces entered the process of dividing commercial buildings. Lee Tae-hee, a researcher at the Construction and Industry Research Institute, said, “There are cases where it is done for normal business purposes, so there are concerns that prohibiting division itself will have negative effects,” adding, “However, in the case of dividing commercial buildings, it is necessary to establish measures such as partial restrictions on voting rights, strengthening tax requirements, and differential distribution of profits.”
Reporter Lee Chuk-bok [email protected]
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2024-09-06 12:45:33