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Real estate lotteries, bidding wars, and tax audits in New Songdo

The Prau is a mixed-use office-apartment building going up in the New Songdo free economic zone in South Korea. The instant smart city being built by Gale International, Cisco and other partners. Kolon construction is another of the partner firms involved in New Songdo and has built one of the most fiercely speculated on residential towers in the last couple of years. One of the unique things about the Korean real estate market is the lottery. Due to intense population demands and real estate speculation most affordable housing, or price stabilized housing is handed out using a lottery system. Put down your deposit and wait to see if you get lucky.

The Prau attracted a flurry of interest due to its relative low cost compared to other developments in the New Songdo area. Each Pyeong, (3.3m²) is priced at 6.5 million won which is about $6954 which is about 3 million won less then equivalent properties in near by buildings. The smallest units in the development at  55.98m² are expected to sell for about 65 million won or 56,705.742 USD. The units are especially hot because they are eligible for immediate resale because they are not in one of the ‘speculative areas.’ In the ‘speculative areas’ residents are not allowed to resell apartments that have not been occupied. Overall 257,706 people applied for the lottery of the 27 smallest units, (those under 66m²) with a required deposit of 5 million won. S 597,192 people applied in total for the 123 studio apartment/officetels.  As the building is a mixed apartment/officetel the units can be used as either residences or offices.

According to the Korea Times the National Tax Service intends to audit the 123 people who won the lottery for units in the building to hunt down speculative buyers and sellers. The government sent tax officials out to monitor the streets around the construction site and the showroom to monitor back-door sales of property rights.

“We decided to launch meticulous tax audits as the Songdo officetels can encourage speculative investment on the real estate market, which has been stabilized recently’’ S




Discussion

4 Responses to “Real estate lotteries, bidding wars, and tax audits in New Songdo”

  1. Real estate raffles could pull them out of foreclosure.

    Posted by shawnking68@gmail.com | 10/07/2011, 9:43 pm
  2. How do I go about purchasing an apartment?
    Any suggestion/advice will be very much appreciated.

    Posted by Yong Park | 15/09/2012, 10:45 pm

Trackbacks/Pingbacks

  1. [...] As is common with hotly anticipated properties in Korea all of the 1,596 residential units sold out within the first two days they were listed on the market.  To read more about this phenomenon take a look at our article ‘Real estate lotteries, bidding wars, and tax audits in New Songdo’. [...]

  2. [...] in taking a look at the housing and office space options in New Songdo Check out our article on The Prau, or on The # First World. You can also take a look at what they are doing with container [...]

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