Builders offering discounts to unload apartments

Local developers are boosting promotions to sell more apartments after the government’s new property market incentives went into effect last month.

After going through several modifications in the National Assembly, the government’s plan will give capital gains waivers to people who purchase new or unsold apartments worth up to 600 million won ($536,000) or no bigger than 85 square meters (914.9 square feet) if they sell them within five years. It applies to people who sign sales contracts from April 1 until the end of this year.

Studios, also known as officetels in Korea, will also benefit after the Ministry of Strategy and Finance revised an enforcement ordinance on the Special Tax Treatment Control Act on Tuesday. However, the tax exemption applies if the studio is used as a residence, not as an office.

To whip up sales, local construction companies are rolling out promotions. Some are cutting apartment prices while others are coming out with various events to lure home buyers.

Hyundai Amco, a builder under Hyundai Motor Group, said last week some of its apartments in Wirye New Town, a new residential area between Hanam and Seongnam in Gyeonggi, will be discounted by 2 percent. A total of 31 units of 95 square meters between 580 million won and 600 million won will be eligible for the tax benefit, according to the company.

Samsung C&T, the nation’s second-largest builder, also lowered the price of its Raemian Hurest apartments in Goyang, Gyeonggi, to under 600 million won to qualify for the tax waiver. A 132-square-meter apartment was priced over 700 million won, but after a 36 percent discount, it is now being offered for around 450 million won.

Dongbu E&C said it lowered the price of its 149-square-meter Sinbong Centreville apartments in Yongin, Gyeonggi, by 30 percent to 500 million won.

Lotte E&C is offering various events for potential home buyers. The company is opening an art exhibition at the model home for its Lotte Castle Apartment complex in Woonjung-dong, Paju, while giving out gas coupons for drivers.

For its Dongtan Lotte Castle Albatross apartments, Lotte E&C gave out snack boxes to its model home visitors on Children’s Day. The company also gave potted flowers to visitors last weekend as part of Coming-of-Age Day, while this weekend, the builder will give goldfish to celebrate Buddha’s Birthday.

Posco E&C is also offering gift cards and free family photo shoots for people who sign contracts on its Gangneung the Sharp apartments in Gangwon.

Daewoo E&C said last week it will offer a 30 million won discount on its officetels in Jeongja-dong, Seongnam, and it will pay 1.5 million won worth of gift tax for owners who transfer the officetel to their children.

Hyundai Asan is offering TVs, refrigerators and vacuum cleaners as lottery prizes for people who sign contracts on its Vill N Dus officetel located in Naepo New Town, South Chungcheong.

Industry insiders say customers should be wary of such promotions because they are used to off-load apartments that have been slow to sell.

Meanwhile, according to local property information provider Real Estate Serve, among the 34 apartment complexes in Korea that began sales last month, only 13 have sold all their units, a similar volume to a year ago, when there was no capital gains tax waiver.

Industry insiders said that although the plan was announced last month, it took so long to get through the National Assembly that potential buyers might have missed the news.

Real Estate Serve expects sales to pick up this month as the news spreads through promotions.

By Joo Kyung-don [kjoo@joongang.co.kr]