Cheongdam Le El penthouse reserve units fail to sell for 10th time as asking price drops to W20.33b

Cheongdam Le El in Cheongdam-dong, Gangnam-gu, Seoul is putting its reserve units back on the market at reduced prices after seven units — including penthouses — again failed to find buyers even after benchmark prices were lowered in a previous auction. The asking price for the largest penthouse has fallen more than 2 billion won in just over two months.

According to the reconstruction industry, the Cheongdam Samik Apartment Housing Reconstruction and Improvement Project Association is holding a new auction for seven Cheongdam Le El reserve units through Thursday. The units on offer are three 84-square-meter units and four penthouses that went unsold in the ninth auction.

The benchmark prices for the four penthouses have been set as follows: the 218-square-meter unit in Building 102, Unit 3503, at 20.33 billion won ($15.1 million); the 202-square-meter unit in Building 108, Unit 3502, at 19.5 billion won; the 200-square-meter unit in Building 108, Unit 3401, at 17.72 billion won; and the 172-square-meter unit in Building 107, Unit 3503, at 16.1 billion won.

When the units were first offered for sale in June, the benchmark prices were 22.59 billion won for the 218-square-meter unit, 21.07 billion won for the 202-square-meter unit, 19.68 billion won for the 200-square-meter unit, and 17.8 billion won for the 172-square-meter unit.

The largest unit, at 218 square meters, has seen its benchmark price fall from 22.59 billion won in June to 21.46 billion won in the ninth auction earlier this month, and now to 20.33 billion won — a drop of 2.26 billion won, or about 10 percent, in roughly two months. The association had already cut the penthouse benchmark prices by around 5 percent ahead of the ninth auction, but that reduction also failed to produce a sale.

The other penthouses have also seen their benchmark prices fall compared with June: the 172-square-meter unit by about 1.7 billion won, the 200-square-meter unit by 1.96 billion won, and the 202-square-meter unit by about 1.57 billion won. Even in Gangnam's new-build market, where penthouse supply is rare, price tags in the 16 billion to 20 billion won range are making it difficult to find buyers.

The benchmark prices for the three 84-square-meter units have also been lowered: Unit 804 in Building 105 to 5.22 billion won, Unit 605 in Building 106 to 5.17 billion won, and Unit 505 in Building 107 to 5.19 billion won. In the ninth auction, the benchmark prices for these units had been around 5.5 billion won each.

The payment structure unique to reserve units — which requires buyers to raise large sums in a short period — is also cited as a barrier to sale. Bidders must submit a deposit equal to 10 percent of the benchmark price to participate. After winning, the buyer must pay 20 percent of the winning bid as a down payment, with the remaining 80 percent due by Jan. 16 next year.

If the 218-square-meter unit were to sell at its benchmark price of 20.33 billion won, the bidder would need to put up 2.03 billion won just to enter the auction. The down payment would come to 4.07 billion won, and the buyer would then need to arrange the remaining balance of 16.26 billion won within roughly four months.

Reserve units are inventory that reconstruction and redevelopment associations set aside — rather than offering through general pre-sale — to cover potential changes in member eligibility or litigation during the project. Unlike standard apartment subscriptions, they are typically sold through open competitive bidding without the use of a housing subscription account.

Penthouse reserve units being discounted after failing to sell is not without precedent. When Raemian One Bailey in Banpo-dong, Seocho-gu, Seoul opened for move-in in 2023, the association set the initial benchmark price for its 185-square-meter penthouse reserve unit at 12.6 billion won. After repeated failed auctions, the benchmark price had fallen to 10.1 billion won by the third sale attempt in November of that year — 2.5 billion won, or about 20 percent, below the original asking price.

Gaepo Xi Prestige, rebuilt on the former Gaepo Jugong 4 complex, also listed two 185-square-meter penthouse reserve units but failed to find buyers in the initial auction. The 34th-floor unit was offered at a minimum bid of 9.5 billion won and the 21st-floor unit at 8.5 billion won, but both were passed over. They were eventually sold for 8.5 billion won and 7 billion won, respectively. The 21st-floor unit in particular sold for 1.5 billion won — about 17.6 percent — below its original asking price.

The supply of ultra-large penthouses from reconstruction projects is expected to grow further. Particularly in the Apgujeong area, widely regarded as the biggest prize in the domestic reconstruction market, developers are planning unit sizes rarely seen in existing apartment stock.

The association for Apgujeong District 2 has proposed a 300-square-meter penthouse in its preferred unit-size survey, with an estimated pre-sale price for association members of 21.07 billion won. In a similar survey conducted last year, 13 members expressed interest in that penthouse unit.

In Apgujeong District 4, a 290-square-meter penthouse has been proposed with an estimated member pre-sale price of 21.09 billion won. In Apgujeong District 3, the alternative design submitted by contractor Hyundai Engineering & Construction includes 54 penthouse units, two of which are proposed as 405-square-meter "triplex" super-penthouses spanning three floors — equivalent to 604 square meters of supply area.

However, the specific supply method and pricing for these ultra-large units may change as the projects progress. Industry sources say options under discussion include selling them to association members or setting them aside as reserve units for later sale.

Industry analysts say the ultra-high-end penthouse market is still in its early stages, and that price alone does not tell the full story — tax burdens and the nature of the buyer pool must also be considered.

Kim Je-gyeong, director of Toomi Real Estate Consulting, said the repeated failed auctions for the Cheongdam Le El penthouse reserve units appear to reflect buyers' wariness about property-holding tax burdens under the recently proposed tax reform. "The fact that penthouses priced above 20 billion won are appearing in reconstruction projects at all is itself a relatively recent development," he said.

He added that demand for such ultra-high-end penthouses should be seen as a new buyer segment rather than simply as competition with existing luxury housing — one that values residential comfort and the amenities and management convenience of a large complex, but does not require the level of privacy that a standalone house would provide.