Approval of Pre-Sale of the “Second Dogok” Reconstruction Complex is Suspended

It was decided that the pre-sale of the second Dogok reconstruction complex in Daechi-dong, Gangnam-gu, scheduled to take part in the fourth simultaneous pre-sale in Seoul slated for May 2, would be withdrawn.

In addition, the Fair Trade Commission also jumped on the above-mentioned matter on April 26 by stating that it has investigated the situation of a comprehensive pre-sale market.

On that day, Han Duck-soo, vice prime minister and minister of Finance and Economy, reaffirmed the government’s strong will over the reconstructed apartments, “The approval for reconstruction is permitted by the central government and local governments. And in that process, the central government’s policy should be included.”

Han said, “Even if increasing the housing supply is the best alternative, it needs to be backed up by a housing policy in terms of demand until we secure sufficient housing,” adding, “The government is doing its utmost to curb real estate speculation so that the lower-income class won’t be affected by a hike in real estate prices while vitalizing the housing sector concurrently.”

On the same day, the Ministry of Construction and Transportation (MOCT) stated, “The Gangnam District Office accepted the MOCT’s request, in which the MOCT asked for a suspension of the approval of pre-sales, in order to investigate problems of the reconstruction project, including the management, disposal, and plan of the second Dogok reconstruction complex.”

This is the first time for a local government to put off an approval of a pre-sale due to the request of the government.

In response, it is high likely for the reconstruction complex in the Gangnam area, which have prepared for applying for a pre-sale in May, including Jamsil Jugong 1 complex in Songpa-gu, to put the brakes on the plan if problems of the project’s procedures come out.

Seo Jong-dae, director of Housing Bureau of the MOCT said, “The MOCT is investigating five or six reconstruction complexes that are expected to apply for permission for pre-sales soon.” He added, “If there are problems, it is possible to carry out measures such as stopping the project or suspending the approval of pre-sales.”

Sang-Rok Lee myzodan@donga.com higgledy@donga.com