High-Value Auctions Draw No Interest

A total of 480 articles worth more than 10 billion won in initial appraised value have been put up for auction as of December 20, 2005. The total is the highest number in three years.

The articles include large-scale commercial centers, accommodations, office buildings and factories. The number dropped to 323 in 2004 after reaching a peak of 966 in 2000 in the wake of the Asian financial crisis, but it has rapidly turned around this year.

In particular, the number of large-scale commercial centers and shopping malls up for auction has significantly increased. This year, 212 items in this category were put up for sale, about 70 percent up from the 124 items for sale in 2004.

After plunging to 30 articles in 2002, accommodations saw 84 items put up for auction this year, a record-high since 2000. The number of land exceeding 10 billion won in estimated value also reached 74 thus far this year.

Planning team leader at Digital Taein Lee Yeong-jin said, “Some forecast that the economy is going to pick up, but more large-sized more large-sized items will be put up for sale at auction since real, domestic demand has not fully recovered.”

Auction Items Knocked Down to Half Price-

Department stores, traditional markets and large-scale shopping malls have recently been put up for sale in the auction market.

As giant discount stores including E-Mart, Lotte Mart and Carrefour have gained more ground across the nation, small and medium-sized distribution facilities went bankrupt. Moreover, some large-scale commercial centers, which have not been sold yet, are also auctioned off due to a depressed real estate market.

Geonyeong Omni Department Store in Junggye-dong, Nowon-gu, Seoul, which has already failed to be sold at auction two times, was put up for auction once again on December 20 at 23.66 billion won, over 10 billion won lower than the initial appraised value of 36.97 billion won, but the auction was again unsuccessful. There will be another auction for the building at about 18.9 billion won, a price of only about half of its estimated value, on January 17, 2006.

Daebaek Shopping in Jukdo-dong, Buk-gu, Pohang, North Gyeongsang Province will go under the hammer for 19.57 billion won on December 27, which is only about half of its estimated price.

Jungang Market in Okgyo-dong, Jung-gu, Ulsan is also scheduled to be up for auction sale on January 11, 2006 for approximately 8.5 billion won, about 70 percent cheaper than its appraised value. Earlier, Olympus Department Store in Dal-dong, Nam-gu, Ulsan was sold at half of its appraised value of 17.7 billion won in October.

Easy Bell Department Store in Beomcheon-dong, Busanjin-gu, Busan set a record when it was appraised at 50.86 billion won, the highest value in regional auctions, but was auctioned off at only 13.5 billion won.

Most of the giant distribution facilities are knocked down to less than half of their appraised values following a series of failed auctions because their huge scale and complicated relationship over claims are making bidders reluctant to buy.

imsoo@donga.com