In protest, residents sent a truck to Hoban E&C’s headquarters in Seoul, voicing their disapproval. (Image courtesy of the Resident representative meeting in response to the discounted sales at Hoban Summit Eastella in Daegu, South Korea)
DAEGU, May 20 (Korea Bizwire) – As unsold apartments pile up in Daegu, conflicts are intensifying between early buyers who paid premium prices and later buyers who secured units at significant discounts.
The situation has reached a boiling point, with existing homeowners blocking apartment complexes to prevent discounted buyers from moving in.
Residents of Villiv Heritage in Suseong-dong 4-ga, Suseong-gu, Daegu, are standing guard inside and outside the complex to prevent these later buyers from entering. Barbed wire fences have been erected around the apartments, including at the main entrance, with placards displayed that read, “No to buyers using public auctions or no-bid contracts.”
Move-ins for the early buyers began last August, yet less than 20 percent of its 146 units have been sold. The remaining units are now being offered on the public auction system at discounts of 300 million to 400 million won below the original prices.
Existing residents are demanding refunds, citing a contractual clause that stipulates, “If the terms of the contract are changed, the existing contract will be retroactively applied to the same terms.”
Similarly, Hoban Summit Eastella in Yulam-dong, Dong-gu, Daegu, has 20 unsold units. However, Hoban E&C, the construction company responsible for building the complex, is unable to sell their remaining properties.
Early buyers have placed banners on the windows stating, “We are resolutely opposed to those who try to move in using discount sales,” and are pressuring discount-based buyers to pay a 20% management fee.
Earlier this year, Hoban E&C launched a drastic discount sale, offering up to 93 million won off remaining units, but faced strong opposition from existing residents. In protest, residents sent a truck to Hoban E&C’s headquarters in Seoul, voicing their disapproval.
Existing buyers fear falling property values. For instance, if an apartment worth 1 billion won is sold at a 40% discount for 600 million won, buyers who secured discounts can sell it for 700 million won, gaining a benefit of 100 million won.
Conversely, if market prices drop from the actual transaction price, those who bought at 1 billion won stand to incur significant losses.
A warning sign warns buyers of discounted units at the SJ Raon Private complex in Shinmae-dong, Suseong-gu, Daegu. (Screenshot image of an online community “Hogaeng NoNo”)
From the construction companies’ perspective, the situation is complex. Typically, these companies sell most units during the initial sales phase through aggressive marketing over the first two to three years of construction. Any remaining units are then classified as distressed sales.
Meanwhile, Daegu has seen a significant rise in post-construction unsold units, often referred to as malicious unsolds. The Ministry of Land, Infrastructure, and Transport reports that at the end of the first quarter, Daegu had 1,306 such unsold units, the highest number among the country’s 17 cities and provinces.
M. H. Lee (mhlee@koreabizwire.com)
