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Pangyo Builders Demand Higher Rents

Posted March. 20, 2006 03:34,   


Construction companies, including Daebang Construction, Jinwon E&C, Moa Construction and Gwangyoung Construction, building private rental apartments in Pangyo New Town are asking Seongnam City to set the rental rate of a 32-pyong apartment at 400,000-500,000 won per month with a deposit of seven million won per pyeong yesterday.

One of the companies requested a 230 million won deposit charge for a 32-pyong apartment, or 7.2 million per pyeong, and a monthly rent of 400,000 won. Considering that on average, the one percent on the difference between a lease deposit and a rent deposit is paid as monthly rent when converted to a lease deposit, the difference could turn out to be about 270 million won.

A construction company official said, “We calculated the costs for each pyeong at about eight million won, and the rent deposit is around 90 percent of that cost. We plan to receive the rest through monthly rent. This pricing has not been approved by the city of Seongnam, so it could be lower, however”

Real estate observers point out that the rental prices in Pangyo New Town are higher than the areas around it.

According to Kookmin Bank statistics, a deposit for a 32-pyong apartment in the adjacent neighborhood of Bundang Yatap-dong Tap Maeul starts at around 190 to 230 million won, and goes up to 210 to 230 million won in Imae-dong, and 250 to 265 million won for a 33-pyeong apartment in Seohyeon-dong.

If the demands of the construction companies are approved as originally submitted, it will cost more to rent an apartment in Pangyo than in Bundang.

In order to rent a 32-pyong apartment, one needs over 200 million in cash, and will have to pay 48 to 60 million won for the next 10 years until the units are released for sale.

Construction companies claim that they can help renters receive loans for 40 to 50 percent of the deposit money, but renters will have to pay monthly interest. In addition, when the houses are allowed to be sold 10 years later, residents will have to pay the entire house price set at around 90 percent of nearby house prices.

Real estate information company “Real Estate 114” Deputy Manager Kim Gyu-jung explained, “We in the real estate business consider that although they are new apartments, and they can be sold in 10 years, their rent prices are high. If deposit requirements and monthly rents are high, when the houses are sold their profit margin will be low.”

2,080 New Apartments—

Out of the 9,420 new apartments smaller than 25.7-pyong that Pangyo New Town plans to put on the market on March 29, 1,500 for-lease apartments and 580 private apartments will be subject to special supply restrictions. The amount of special supply housing will de decided and announced on March 24.

About 42 percent of the 3,576 for-lease apartments built in Pangyo (1,884 built by the National Housing Corporation and 1,692 by private companies) are special supply residences.

A total of 1,122 of them will be distributed to former residents of the area who were relocated for the construction of the town. They will receive for-lease apartments smaller than 18.2-pyong that may be sold in 10 years.

Of the private apartments, 580, or 9.9 percent, of the 5,844 apartments will be set aside for those who have served the country, those who have been evicted, North Korean defectors, and the handicapped.

About 7,344 apartments (2,080 lease apartments and 5,264 private apartments) will go to housing account subscribers, making the odds of getting a new house lower.

Joong-Hyun Park sanjuck@donga.com