- 訴进行- Interest burden, etc. without explanation, encouraging investment
- "At the worst time, the business itself collapses" large-scale damage concerns

 2010.02.04 08:07

"You can invest without worrying because the project will be completed by the end of the year."(A certified official near Wangsimni New Town)

There is a "bombast" to encourage equity investment in reconstruction and redevelopment projects that may not be completed. Some brokerages are offering properties tangled in lawsuits and failing to explain the risks to investors, such as the progress of the lawsuit and interest charges if the project is delayed.

In Wangsimni New Town District 1, where a recent ruling invalidating the establishment of the association put the brakes on the project, the association and real estate agencies are trying to reassure investors. Although there is a possibility that the appeal will be dismissed, the association has decided to go ahead with the general distribution in April.

"Most of the redevelopment complexes that have been litigated have eventually made up for the defects and proceeded normally, and it is certain that the association and the district office will win the appeal, so the general distribution recipients will not lose money," said an association official. There are some single-family houses and villas for sale, but there are no disappointing sales. Currently, Wangsimni New Town District 1 is priced at a premium of 190 million to 210 million won.

"A single-family house with an appraised value of 270 million won can get an exclusive 84-square-meter A tower apartment in the future, which is in the range of 430 million to 360 million won, and a villa with a right of way appraised at 350 million won is listed at 540 million won," said an official from the S-certified office in Hawangsimni District, Seongdong-gu. "The general sales price of the exclusive 84-square-meter D plate is set at 660 million won, and it is worth investing considering that house prices will rise further."

However, it will take at least eight months for the Supreme Court to make a final decision on the case after the appeal, and the association is expected to lose money. "If the district office approves the sale, we will apply for a preliminary injunction, and the plaintiffs have never asked for money from the association and have no intention of settling with the association," said Hyun In-hyuk, a lawyer at Hanbyul, a law firm representing the plaintiffs in Wangsimni New Town District 1. "It is dangerous for the association to push forward even though there is a high probability that the appeal will be dismissed."

The situation is similar in Sindang District 7, where the general sale has ended but the selection of the contractor was ruled invalid in the first trial. Here, Daelim Industries is continuing construction because the application for a temporary injunction to stop construction was not accepted, but there is a possibility that the general distribution itself may be invalidated due to a complicated lawsuit for the invalidation of the establishment of an association and a lawsuit for the revocation of administrative disposition.

Despite this situation, the general distribution rights are traded at a premium of 45 million to 65 million won. "Sindang e Convenient World is popular with investors and real buyers because of its low sales price, so transactions go well," said a K-certified official in Sindang District 7. "The project is already underway, so buyers and those who received the general distribution are not too worried."

However, there are also voices of concern. An official from the National New Town Rainy Day Committee said, "If the project collapses, the association has to ask for the general distribution part, but the district office and the association are pushing ahead with the project and being complacent," and warned, "There may be more people who invest and suffer losses because they only trusted the words of realtors who brokered the project."

"In the case of Wangsimni New Town, there are various problems, such as when buying a cooperative share, members receive interest-free and interest-free relocation fees, but the interest rate rises to 6.5 to 7.5 percent for those who inherit the cooperative status," said a real estate official in Seongdong-gu. "If you want to invest in a redevelopment and reconstruction complex that is in litigation, you should keep in mind that if the project is delayed, the interest cost and, in the worst case, the project will go back to square one."