Narrower “Lotto Pangyo”

How Much Did They Decrease?

A recent improvement bill reflected the result of an environmental effect evaluation to minimize the environmental harm following a new town development.

The number of households in the development decreased from 29,700 to 26,804, and the area for building houses was also reduced. The population density in the development was reduced from 96 people to 86.4 people per hectare, and the population size decreased from 89,100 to 80,412 people.

Out of the 2,896 households reduced, 2,275 households were apartments that were to be distributed simultaneously in November. And according to the private area standard, there are 105 houses 18 pyeong or less, 1,125 houses over 18 to 25.7 pyeong, and 1,045 houses over 25.7 pyeong. The number of publicly leased apartments (for 10 years), which are being distributed simultaneously, also decreased by 541.

Following this, regarding Pangyo area sales in November, only 16,157 households are available, including 12,246 normal apartments and 3,911 publicly leased apartments. The remaining houses will be distributed after next year.

The number of sales of residential and commercial complex decreased by 121 while that of sales of detached houses decreased by 51. On the other hand, 30-year lease apartments and tenement houses increased by 249 while tenement house increased by 44.

Expected Competition Ratio?

Because the sales of more than 2,800 apartments decrease and sales of 2,250 residential and commercial complexes have been delayed, the competition ratio for November simultaneous sales has significantly increased. In another words, the possibility of winning has decreased.

If the highest-ranked people without houses, meaning those living in private homes of 25.7-pyeong or less in Seongnam (those more than 40 years old who have lived without a house for more than 10 years) try out for the distribution, the competition ratio increases from 72 to one to 89 to one. The competition ratio of highly-ranked people, those who are more than 35 years old and who have lived without a house for more than five years, increases from 95 to one to 118 to one when they try out for the distribution.

If all of high-ranked people without houses in the metropolitan area try out, the competition ratio in the metro area increases from 83 to one to 102 to one, and rate of highly-ranked people without houses in general increases from 166 to one to 206 to one.

If the people ranked first in the metropolitan area all try out, the competition ratio becomes 1,286 to one.

However, the competition ratio of private areas with apartments more than 25.7 pyeong (assuming purchase application of 60 percent) in size is relatively low: 54 to one for Seongnam and 186 to one for the metropolitan area.

Professionals say that there is very little possibility of winning if one is not a superior-ranked person without house, and that therefore it is better to divert attention to distribution in other areas, including the already-existing apartments in the Yong-in or Pangyo areas.

How much will be the sales price?

The Ministry of Construction and Transportation announced that the cost of forming the building site of Pangyo’s new town is 7.43 million won per pyeong. Calculating the land price with this, adding the standard construction cost (3.39 million won), and adding underground parking area and convenience facility construction costs, the estimated apartment selling price will be eight to 15 million won per pyeong.

The selling price per pyeong of private areas of 25.7 pyeong or less, which is affected by the maximum selling price limit system, is eight to 8.9 million won for areas 18 pyeong or less, and 8.7 to 9.9 million won for areas of 19 to 25.7 pyeong or less. For apartments above 25.7 pyeong, which is affected by the bond and selling price bidding system, the estimated price per pyeong is around 15 million won.

It is estimated that apartment prices will differ by location. The East Pangyo area, which has floor area ratio (FAR) of 175 percent, is estimated to be 800,000 to 900,000 won cheaper than the west Pangyo area, which has floor area ratio (FAR) of 148 percent, as more houses can be built.

Future Plans-

Land for housing will be supplied to construction companies through sortition or bidding next month. Construction companies will finish design and reviewing by October and starts selling in November after receiving business approval.

Habitation will start from the end of 2008 after constructing a sewage disposal facility and expressway from Seoul to Yong-in.

Sang-Rok Lee myzodan@donga.com