A Cold Wind Blows Through Gangnam’s Non-Apartment Area

Seoul Gangnam’s non-apartment area is showing hollowness due to the recent economic recession and real estate regulations.

Banpo4dong and Bangbaedong of Seocho, Nonhyeondong and Yeoksamdong of Gangnam, Samseongdong’s house-intensive region of middle to high priced villas and multi-households are the most famous areas. Monthly rent has dropped twenty percent since last autumn and the going rate has not yet recovered from last year’s 10-29 policy. Thus, properties are losing money while demand decreases.

--Stagnant house market =In the afternoon of May 2, real estate agents in Seorae village, Banpo4dong, Seocho, put out words such as “Urgent: selling an 80 pyeong villa for 650 million won”; “60 pyoeng monthly rent of 1.5 million.” These prices are twenty to thirty percent lower than six months ago. Newly built villas and multi-household houses also have the words “special sale” in front of their buildings.

Forty to sixty pyeong villas per pyoeng selling prices are 8 to 12 million won, and over sixty pyeong luxurious villa market prices are 15 million won, which does not show that much difference from two or three years ago. Rent has decreased. Luxurious villas of 6 to 10 million won fell to 4 to 8 million won, and middle to high priced villas of 1.5 to 2 million won fell to one to 1.5 million won.

Century21KS representative Kim Seong said, “Thirty to forty percent of nearby villas are not yet sold or are empty due to lack of demand. French workers returning to their country after the opening of rapid-transit railway have affected this situation as well.”

Nonhyeondong and Yeoksamdong’s markets are more or less the same. Monthly rental terms for rooms that ask for “a deposit of 5 million won and a rent of 300,000 won every month,” usually seen around universities, have made their appearance in Nonhyeon. There were a lot of less than 10 million won per pyeong villas.

Director Lee Kyung-soon of Jaewon, near Sunreung, commented, “Properties started to increase since last winter and started to pile up since spring. Hotel-like option rooms, a ten-pyeong room including amenities and household appliances, used to cost 1.3 million won. But now, it only costs one to 1.1 million won. 700,000 won rooms are now between 400,000 and 500,000 won.”

--Reasons and forecast= Analysts evaluate that because too many villas and multi-household houses were newly built over the past one or two years, and because luxurious apartments, which offer a better living environment increased, the demand for non-apartment dwellings fell. Also, they saw workers, who cannot provide the monthly rent, leaving Gangnam as another reason.

There are also regional causes. Many of Banpo4dong’s residents, the French, have left for home and Nonhyeon’s working women have emptied out their rooms as well due to the room salon economic recession. Yale estate agency’s Kang Jong-woo said, “The present Nonhyeon villa empty room rate is twenty percent. Liquor selling shop workers, who used to live in a room each, now share one room with two or three people, thus, rent has fallen by twenty percent.” He added, “The economy is at its floor level. There was only one selling in a year.”

Researcher Kim Hyun-ah of the Construction and Economy Research Institute said, “As regulated luxurious apartments arise, the demand for villas in residence areas fall. Looking at excess supply, economy extremities, and real estate market regulations, this situation is speculated to carry on for a while. Auction goods with debt will pour in as well.”

In-Jik Cho cij1999@donga.com