The ‘Dunchon Jugong Reconstruction (Olympic Park Foreon)’ association and the construction business group in Gangdong-gu, Seoul do not disclose the final contract rates of the 1st and 2nd place winners, and various speculations are coming and going in the market. There was also an argument that the contract rate was less than 50%.
According to the maintenance industry on the 28th, the Dunchon Jugong Reconstruction Project Group and the union do not disclose the final contract rate of the legitimate contract. An official from the construction project team said, “We will not disclose the contract rate until March when the unranked subscription ends.” Under the current law, private apartments in unregulated areas do not have to disclose the contract rate and the number of remaining households. Gangdong-gu was lifted from the regulated area with the 1st and 3rd measures.
Olympic Park Foreon is a complex with 3 floors below the ground and 35 floors above ground, 85 buildings and 12,032 households. Among them, 3695 households were supplied for general sale, drawing much attention as a measure of the future sale market. Prior to the pre-sale application, even rumors of ‘100,000 subscriptions’ flowed, but in reality, the competition rate was lower than market expectations at an average of 5.45 to 1.
Dunchon Jugong contract rate ‘secret’… “If it becomes known, will it have a bad effect?”
Afterwards, the construction project team and the union that received the legitimate contract decided to keep the contract rate private. The construction project team said, “It went better than expected. It is generally positive,” and only shed a vague figure that the exclusive 59·84㎡ is more than 70%. It is said that the ‘initial contract rate of 40% incident’, which was feared as the worst situation, did not occur.
However, it is interpreted that related industries are reluctant to disclose it because the contract rate is low. An official from a large construction company said, “It is said that disclosure of the contract rate is not mandatory, but if it met or reached a level equal to market expectations, it would have been disclosed.”
The actions of the Dunchon Jugong Reconstruction Association are also fueling these doubts. This is because the construction cost conflict with the construction project team is showing signs of recurring, and it is because the Housing and Urban Guarantee Corporation (HUG) raised an objection to the project cost guarantee fee.
The association decided to submit data for verification to the Korea Real Estate Agency, saying that it could not accept the extension of the construction period and the increase in material costs included in the amount of loss compensation due to the recent suspension of construction by the construction project team. In August of last year, the construction project team and the union agreed to accept the results of the Korea Real Estate Agency’s verification of the loss compensation amount of 1.14 trillion won.
Conflicts over construction costs and guarantee fees… One line “Estimated contract rate of 48%”
The Dunchon Jugong Reconstruction Association sent an official letter to the Financial Supervisory Service and the Financial Services Commission asking them to review cancellation or reduction, saying that HUG’s guarantee fee of 19.5 billion won for the project cost of 750 billion won was excessive. Last year, the Dunchon Jugong Reconstruction Association was denied an extension of a business cost loan of 700 billion won by a large group of financial companies.
The maturity of this loan was on the 19th, and there was a burden of receiving and repaying the down payment by the due date of the 17th. The HUG guarantee relieved the burden of repayment of funds and the loan interest rate was drastically lowered to 6.4%, but even this was raised as a problem.
The low contract rate is also pointed out as the reason for the union’s move. An industry insider said, “It is not easy to understand that raising concerns about construction cost conflicts even after going through a suspension of construction or complaining that fees are expensive to HUG, which saved the business from a crisis, is a move that cannot be easily understood.” It can only be interpreted as low,” he said.
He said, “If the sale fails, the member contributions must be increased to make up for the lack of funds.
In the real estate community, it was argued that the contract rate of Dunchon Jugong was only 48% by inversely calculating the preliminary number multiple. Regarding this, the construction project team said, “There is no basis for the contract rate floating in the market.”
Oh Se-seong, Hankyung.com reporter [email protected]
