Lotting-out in polarization due to ‘post sales’…Reorganization expected on large constructing company basis
Park Sang Gil | sweatsk@ | 2018-02-08 11:13:22
The market is expected to become more polarized among construction companies due to the post-sale system, which will be implemented in earnest in the first half. The post-sale system is a way to distribute after the whole construction process of the housing corporation is over 80%.
According to the Ministry of Land, Transport and Maritime Affairs, the Ministry of Land on February 7, Infrastructure and Transport will introduce a post-sale system in the first half of this year. The Ministry of Land, Infrastructure and Transport submitted an amendment to the Housing Act to the National Land Transport and Traffic Commission on June 6, requiring the postpaid system from the public sector, and apply the post-allocation roadmap to the second long-term residential comprehensive plan (2013-2022). The Korea Land and Housing Corporation (LH), which supplies public housing to public agencies under the Ministry of Land, has also confirmed the introduction of a post-sale system.
Unlike the current pre-sale system, builders and other companies complete their apartments by self-financing for 2-3 years without any down payment and pre-payment. As such, large construction companies with abundant funding capacity will be able to secure stable orders, but mid- to small-sized construction companies, which have relatively lower funding and credit ratings, are expected to post orders.
Even if there is no pre-sale price in the early stage of the project, the market is reorganized mainly for large builders who do not have difficulty in procuring construction costs.
Also, it is highly likely that a financial institution that provides financing should make a loan without confirming the risks such as the pre-sale results. Therefore, the credit rating is good, so the loan can be received at a low interest rate. A construction industry official said, "In some cases, construction companies that are working out or where business conditions deteriorate may not be able to win orders."
Real estate experts advised that under-construction companies should actively engage in government-led projects to diversify their profits.
Cho Hyun-wook, vice president of Daewoo Economic Research Institute, said, "Small and medium-sized construction companies, which have relatively low funding power compared to large construction companies, are in the wrong position. It is advisable to actively engage in public order projects such as urban regeneration projects, which are favorable in terms of order, or to actively engage in the 2030 Seoul area living project, such as furniture businesses with 1 to 2 people, and `2030 youth housing in the station area`.”
By Park Sang Gil sweatsk@
[ copyright ⓒ The Digitaltimes ]
According to the Ministry of Land, Transport and Maritime Affairs, the Ministry of Land on February 7, Infrastructure and Transport will introduce a post-sale system in the first half of this year. The Ministry of Land, Infrastructure and Transport submitted an amendment to the Housing Act to the National Land Transport and Traffic Commission on June 6, requiring the postpaid system from the public sector, and apply the post-allocation roadmap to the second long-term residential comprehensive plan (2013-2022). The Korea Land and Housing Corporation (LH), which supplies public housing to public agencies under the Ministry of Land, has also confirmed the introduction of a post-sale system.
Unlike the current pre-sale system, builders and other companies complete their apartments by self-financing for 2-3 years without any down payment and pre-payment. As such, large construction companies with abundant funding capacity will be able to secure stable orders, but mid- to small-sized construction companies, which have relatively lower funding and credit ratings, are expected to post orders.
Even if there is no pre-sale price in the early stage of the project, the market is reorganized mainly for large builders who do not have difficulty in procuring construction costs.
Also, it is highly likely that a financial institution that provides financing should make a loan without confirming the risks such as the pre-sale results. Therefore, the credit rating is good, so the loan can be received at a low interest rate. A construction industry official said, "In some cases, construction companies that are working out or where business conditions deteriorate may not be able to win orders."
Real estate experts advised that under-construction companies should actively engage in government-led projects to diversify their profits.
Cho Hyun-wook, vice president of Daewoo Economic Research Institute, said, "Small and medium-sized construction companies, which have relatively low funding power compared to large construction companies, are in the wrong position. It is advisable to actively engage in public order projects such as urban regeneration projects, which are favorable in terms of order, or to actively engage in the 2030 Seoul area living project, such as furniture businesses with 1 to 2 people, and `2030 youth housing in the station area`.”
By Park Sang Gil sweatsk@