Far-fetched Explanation

The Ministry of Construction and Transportation has created a stir over its far-fetched interpretation of the address statistics of applicants who wish to buy property in a serviced residence in Satellite City, Hwaseong, Gyeonggi Province.

The Ministry said in a press release on Thursday that 4,900 of 24,000 applicants for “Metapolis,” a serviced residence in Dongtan 1 New Town, showing a 5 percent acceptance rate, had Seoul addresses on their application, accounting for 20 percent of the total applicants. This was four times the average of 1,229.

It added that when the residents of the so-called “bubble seven”, the regions viewed as the main culprits for rising housing prices – Seoul City, Seongnam, Gwacheon and Yongin-Suji, Gyeonggi Province – are added up, the number soars to 54 percent, reflecting that the greatest interest in the new city comes from the affluent residents of Gangnam.

However, experts point out that in the face of mounting criticism from the public about whether the new city can replace the expensive Gangnam area, the ministry interprets statistics arbitrarily without distinguishing the demand of investors from that of live-in residential buyers. According to a recent data from Hwaseong city, only 9.2 percent, or 217 of the 2,346 residents, of the exemplary complex of Dongtan new town moved from Seoul between January 29 and March 22 this year.

“Serviced Residences are Different from Apartments”-

Real estate experts think it no surprise that many investors from Seoul come to buy in “Metapolis,” because it is likely to be a landmark of the new town and they will be able to sell as soon as the building is completed and residents are allowed to move in.

An employee of the construction company, speaking on the condition of anonymity, said, “It is no wonder that an overwhelming number of residents of the bubble seven areas are investing in Metapolis, because it is mainly comprised of large-size 40-50 pyeong flats, (pyeong is a unit of measurement in Korea corresponding to 3.31 square metres) and the average cost per pyeong spans from 11.7 million to 17.9 million won. It doesn’t make sense to conclude that the demand from Seoul residents has increased by comparing the price of it with that of other apartments.”

An employee of another construction company emphasized, “Apartments and serviced Residences are totally different. If when the Ministry of Construction and Transportation analyze the statistics, investment demand is regarded as actual demand, they can be seen to be supporting investors.”

Can the New Town Replace Gangnam area?-

The Ministry said that Dongtan 2 New Town can absorb the demand of Gangnam, since it has better conditions such as a fresher environment with more greenery, 1 million pyeong of land for businesses and a reasonable price of 8 million won per pyeong.

However, the market responded differently.

Critics say that green environment cannot serve as a direct incentive for those who want to live in Gangnam, and, without a lot of incentives, the city cannot easily attract businesses, most of which are located in Suwon, despite the regulations in the Seoul Metropolitan area.

In addition, it has to compensate 6 trillion won to the native people and construct infrastructure such as a transportation network. Considering these conditions, some raise doubts whether the price of 8 million won per pyeong can be maintained.

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