SEOUL, Nov. 23 (Korea Bizwire) — Branding, among others, may be one of the key selling points for a product, and that’s why South Korean builders are in sync in launching luxury apartment brands, or renewing their brand identities for high-end consumers amid deepening polarization in the local housing market.
Lotte Engineering & Construction Co. last month introduced its premium residence brand LE-EL and decided to use the label on its reconstructed apartments in southern Seoul. The builder’s latest brand sits above its popular apartment brand Lotte Castle, which debuted in 1999.
Daelim Industrial Co., South Korea’s third-largest construction firm in terms of building capacity, earlier this month renewed the brand identity of ACRO, its luxury apartment brand that was introduced in 2013.
The new logo of ACRO doesn’t have an orange cloud, which it previously shared with the builder’s classic apartment brand E-Pyunhan Sesang.
“For the brand renewal, we’ve done research for about two years in areas ranging from interiors to gardening,” a Daelim Industrial spokesman said.
“We’ve analyzed big data on the lifestyles of wealthy people in South Korea and tried to meet their needs.”
Hyundai Engineering & Construction Co., the country’s No. 2 builder, also jumped on the bandwagon last week by unveiling a TV ad for its luxury apartment brand, The H, for the first time since it was launched in 2015.
The builders’ recent moves to launch new brands or renew existing brands are aimed at refreshing their images to make their apartments more appealing to wealthy consumers.
“It’s been 20 years since the builders began naming their apartments with brand titles, and for some people, it’s about time they got bored with existing brands,” said Koh Sung-soo, a professor of real estate studies at Konkuk University in Seoul.
“In the past, living in a branded apartment was considered something prestigious, but nowadays, there are so many. It has been an important task for the builders to differentiate their apartment brands from others.”
Indeed, South Koreans do care about the brand when buying apartments, just like they do when purchasing cars or handbags.
According to a recent survey conducted by local real estate information provider Real Estate 114, 42.6 percent of people answered that brand is their first criterion when selecting an apartment, ahead of the size of the apartment complex (24.3 percent) and price (17.3 percent).
In last year’s survey, 92 percent of people said brand influences the price of an apartment.
“Apartments are such a big product, and it’s almost impossible for consumers to know all the information,” said Lee Bo-ra, a researcher at Korea Research Institute of Construction Policy.
“Like other goods, brand serves as a safeguard for apartment buyers. Living in such a branded residence also gives residents some kind of pride and feeling of self-satisfaction.”
Real estate experts said the rise of premium brand apartments is related with the polarization of the housing market.
According to data from KB Kookmin Bank, the median apartment price in Seoul was 875 million won (US$743,000) in October, while that in non-Seoul metropolitan areas was only 148 million won.
In wealthy districts in Seoul, such as Gangnam Ward, some apartments are now worth more than 100 million won per 3.3 square meters.
“Builders have to cope with the polarizing trend in the housing market, and one of their strategies is to target wealthy people,” said Ham Young-jin, who leads the big-data lab at the housing application Jikbang.
“Even if the economy is not doing well, luxury brands always have demand because there are high-end consumers. Like other luxury goods, people know that brand determines the value of a product, so that makes the builders come up with new luxury brands.”
Industry watchers said the builders’ recent brand strategy is also part of their efforts to win apartment redevelopment or refurbishing projects, especially in wealthy districts in Seoul.
“These days, it’s difficult for the builders to secure land to build apartments and that made them turn their eyes to reconstruction or refurbishing projects,” said Kwon Il, a researcher at local real estate information provider Real Estate Info.
“Against this backdrop, apartment brand matters to those who push the redevelopment projects, as well as future residents. In order to earn their selection, local builders have to make their brand more attractive.”
Experts said that luxury brand apartments will not make an immediate breakthrough in improving earnings for the builders, who have been also struggling to win overseas orders, but will eventually help them in the future.
“Builders first want to show and earn reputation that their apartments are worth to live in or buy, with new brands,” said Kwon Dae-jung, a professor of real estate studies at Myongji University in Seoul.
“They know sales and profits will grow after that process. It’s a long-term plan.”