Six failed auctions last year, then a halt — bidding resumes at 382.8 billion won

Price set to drop to 200 billion won; Jeju unsold units hit record high

Jeju Hyosung Harrington Place, located in Hagwi-ri, Aewol-eup, Jeju [Naver Street View]
Jeju Hyosung Harrington Place, located in Hagwi-ri, Aewol-eup, Jeju [Naver Street View]

A bulk auction of more than 400 unsold apartments at Jeju Hyosung Harrington Place in Aewol-eup — a seaside town once made famous by the TV show "Hyori's Bed and Breakfast" — has resumed after roughly a year's pause, only to fail again. The latest unsuccessful round deepens concern over Jeju Island's chronic unsold-housing problem, following six consecutive failed auctions last year that eventually brought the process to a halt.

According to Korea Asset Management Corp.'s online auction platform OnBid, Shinhan Asset Trust is conducting a bulk sale of 424 apartment units and two commercial spaces at Jeju Hyosung Harrington Place in Hagwi 1-ri, Aewol-eup, Jeju. The first round of bidding, held Monday, drew no bidders and was declared unsuccessful. The starting price for that round was 382.84 billion won ($281 million).

The complex, completed in late 2024, comprises 17 buildings of up to eight stories and 425 units. When it went on sale in 2023, only 115 people applied for 425 units. Subsequent contract cancellations left 424 of the 425 units without buyers even after construction was finished.

At the time of the original pre-sale, the average pre-sale price for units with an exclusive use area of 84 square meters was about 841 million won, or roughly 25.8 million won per 3.3 square meters — higher than nearby newly built apartments, drawing criticism over excessive pricing.

With the large volume of unsold units unresolved, the properties were first put up for bulk auction last year. Bidding opened at 400.6 billion won but failed across six rounds, with the asking price falling to around 300 billion won before the process was suspended. A subsequent auction that had been scheduled was also canceled at the request of the priority beneficiary, effectively freezing the sale for about a year.

The current auction restarted at 382.8 billion won, below the opening price from last year's first attempt. With the first round now failed, the asking price for the second round, set for Wednesday, drops to 352.21 billion won. It will then fall further in subsequent rounds — 324.03 billion won in the third, 300 billion won in the fourth, 280 billion won in the fifth and 260 billion won in the sixth. The floor price at the 10th and final round is 200 billion won.

Should all 10 rounds fail, the final asking price would be 182.8 billion won — about 47.8 percent — below the opening figure. That would also be 100 billion won lower than the roughly 300 billion won level at which last year's auction was suspended.

It is not certain, however, that all scheduled rounds will proceed. The auction notice states that "the auction may be suspended at the request of the priority beneficiary."

Shinhan Asset Trust also noted that it may cancel the auction on the day of bidding due to internal circumstances or a request from the priority beneficiary, and that it may do so without issuing a separate cancellation notice. Even after a winning bid leads to a signed purchase contract, the contract may be terminated at the priority beneficiary's request. In such cases, the winning bidder receives only the principal of the deposit paid, with no interest.

If a round ends without a successful bid, a private negotiated contract may be concluded at or above the conditions of that round before the next round begins.

Jeju's unsold housing situation has worsened since the complex first went to auction about a year ago. According to housing statistics from the Ministry of Land, Infrastructure and Transport, unsold units in Jeju stood at 3,303 as of July, surpassing 3,000 for the first time in history. Of those, 2,364 were units that remained unsold even after completion — so-called "hard-core unsold units" — a record high.

Post-completion unsold units now account for more than 70 percent of all unsold inventory in Jeju, meaning a significant number of fully built homes have gone without buyers for an extended period — well beyond the typical early-stage accumulation of pre-sale stock.

Jeju has seen demand from outside investors and second-home buyers decline in recent years, compounded by high pre-sale prices and a sluggish local housing market. Post-completion unsold units are a particular burden because developers, contractors and lenders have already committed construction costs without recovering pre-sale proceeds, raising the risk of financial strain across the project chain.

With the first round of the resumed auction already unsuccessful, the key question is whether a buyer can be found as prices are gradually reduced in the rounds ahead.


quq@heraldcorp.com