Auction of new construction site in the vicinity of Seocho-gu, Seoul, 64% vs. Appraised Value… Asking the "Value of Time"
There's been a steady stream of reports of a rapid increase in real estate auction applications. However, these applications are mostly concentrated in residential properties, officetels, and commercial complexes, making them less appealing to investors seeking vacant lots or new construction sites. The Seoul Central District Court auction case 2024ta-gyeong121327, presented this time, is a noteworthy case even within this current trend. The property being sold is a site close to vacant land, and the opportunity to purchase it is open for approximately 641 tpa3t (approximately $641,000 USD) above the appraised value in the upcoming bidding scheduled for January 2026.
If you're interested in the keywords Seoul, Seocho-gu, super-close to subway stations, new construction sites, low-price purchases, and floor area ratio incentives based on district unit plans, this property is well worth considering.
Auction Case Summary
The subject of this sale is the land and building at 936-3 Bangbae-dong, Seocho-gu, Seoul. The land and building are being sold together. The property's greatest strength is its location. It is located approximately 60 meters from Naebang Station on Subway Line 7 and within walking distance of Bangbae Station on Subway Line 2 and Isu Station on Subway Line 4.
The land designation is land, and the intended use is a Class 3 general residential area. It also falls within the Naebang Station area's district unit planning area. Several unlisted buildings, including a warehouse, exist but are not registered or listed on the property register. These buildings, along with the land, are included in the sale.
Rights Analysis
A. The core of rights analysis: the right to cancellation and what the successful bidder acquires.
- The mortgage established on July 22, 2022 is the right to cancel.
- There is a tenant with a valid business license (a deposit of 80 million won and monthly rent of 5.5 million won) who registered as a business on January 28, 2019. The tenant has not yet made a payment request by the payment deadline. Therefore, the successful bidder is the lessee who will take over the property.
- There are delinquent registrations and Seocho-gu (Seoul) tax delinquency dispositions, but they are all deleted and the successful bidder does not take over.
B. Auction procedures based on whether the creditor applying for the auction has been distributed
In an auction, if there is no amount to be distributed after the seizing creditor (auction requesting creditor) deducts the priority burden and auction costs, it is called a no-surplus auction. In this case, depending on the stage of the auction, the court may cancel the auction (Article 102 of the Civil Execution Act) or make a decision not to permit the sale (Article 120 of the Civil Execution Act).
In this case, the lowest bid on the third bidding date was approximately KRW 6.15 billion, and the mortgagee, who has priority over the seizing creditor (the creditor applying for the auction), holds a claim of KRW 6 billion. Therefore, caution is advised, as failure to bid on this bidding date could result in a "no surplus auction."
Auction procedures based on whether the creditor applying for the auction has been distributed
When there is no amount to be distributed after the seizing creditor (auction application creditor) deducts the previous burden and auction costs at an auction, this is called a no-surplus auction. In this case, depending on the auction stage, the court may cancel the auction (Article 102 of the Civil Execution Act) or issue a decision not to permit the sale (Article 120 of the Civil Execution Act).
In this case, the lowest bid price on the third bidding date was approximately KRW 6.15 billion, and the amount of the claim of the mortgagee with a higher priority than the seizing creditor (auction application creditor) amounts to KRW 6 billion. Therefore, it should be noted that if the property fails to be auctioned on this bidding date, it may be considered a zero-surplus auction.
Bidding Schedule and Bidding Precautions
This auction failed twice and a third round of bidding is scheduled for January 21, 2026. Due to the two failed bids, the minimum bid has been reduced to approximately KRW 6.15 billion, equivalent to 64%, the appraised value of approximately KRW 9.6 billion.
The following are considerations when deciding whether to bid and the bid price:
- Considerations when deciding whether to bid and the bid price
- There are many items not listed, so there is a possibility that they will be listed as illegal buildings in the future. Therefore, restoration to original condition or enforcement fines are required.
- As it is a district unit planning area, the most effective use of land is planned, including floor area ratio incentives.
- Preliminary review of yields through elastic simulation
- Tax when acquiring or owning a house that is part of a building
- Maximum lease guarantee period for the taking over tenant
Conclusion – How to evaluate the ‘value of time’?
This property is a rectangular, practically empty lot located in the ultra-convenient area of Seocho-gu, Seoul, and has excellent conditions as a site for building construction.
The fact that it falls under the Earth Unit Planning Area is also evaluated as a factor that can be used to estimate development direction and utilization from a mid- to long-term perspective.
However, there are clear prerequisites to consider during the acquisition process. Due to the structure requiring the acquisition of existing tenants, it could take approximately three years before actual construction can begin.
The monthly rental income generated during this period is more of a supplementary nature and has limitations in being viewed as a key factor in investment decisions.
Ultimately, the criteria for judging this property lies not in price itself, but in time. After enduring a waiting period of approximately three years, the perspective on the development value and future usability of the site becomes a crucial factor in determining whether to bid and the appropriate bid price.
The evaluation may differ depending on how you interpret the size of the value that can be obtained by investing time rather than short-term profits.
I am Keystone Real Estate Brokerage Co., Ltd., where I, a licensed real estate agent and real estate rights analyst (Korea Real Estate Brokers Association), am serving as the CEO, is actively seeking advice on public auctions by hiring a licensed real estate agent specializing in public auctions.
We actively provide consulting and brokerage services for the sale/lease of all types of real estate, including commercial properties (including offices) and buildings. We can also provide legal advice on real estate contracts through our affiliated law firms. Contact Remax Korea and we will arrange a call with the author.
