Actor Seol Kyung-gu seeks to recover W1.46b as ex-agency head's penthouse heads to auction

Penthouse owned by Baek Chang-ju, head of C-JeS Studios, up for auction

Actor Seol Kyung-gu filed provisional seizure worth 1.46 billion won on the property

Appraised at around 5.32 billion won; first auction date set for this month

Actor Seol Kyung-gu speaks at a press preview for the film "Possible Love" held at CGV Yongsan iPark Mall in Yongsan-gu, Seoul, on Sept. 21. [Yonhap]

A penthouse owned by the head of actor Seol Kyung-gu's former agency has been put up for auction, but analysts expect Seol to recover only a fraction of the roughly 1.46 billion won ($1.03 million) he is owed, as his claim ranks low in the creditor repayment order.

According to GG Auction, a 199.2-square-meter unit at Samseong-dong Posco The Sharp in Gangnam-gu, Seoul — owned by Baek Chang-ju, head of entertainment agency C-JeS Studios — is scheduled for its first auction on Oct. 14. Bidding will start at the appraised value of 5.32 billion won.

Baek is a prominent figure in the Korean entertainment industry who has managed a number of high-profile celebrities. The auction has drawn industry attention because it is tied to disputes over exclusive contracts and debt recovery involving former clients.

Built in 2003, Samseong-dong Posco The Sharp is a mixed-use residential complex with 72 units. The property is a four-bedroom, three-bathroom penthouse that Baek purchased for 2 billion won in May 2013 and has not changed hands since.

A compulsory auction on the property was initiated last August. The unit carries a bank mortgage as well as provisional seizures filed by an investment firm and Seol, with total claims amounting to about 8.9 billion won. Seol filed a provisional seizure last June based on a claim of 1.46 billion won.

Industry observers say the property is unlikely to attract strong bidding interest, partly because recent tax reform proposals have raised the cost of holding high-value homes. "It's a large unit in the ultra-premium price range, and it's a high-density mixed-use building where reconstruction is difficult — so it's not the kind of property that appeals to buyers looking for long-term investment value," said Lee Ju-hyeon, a senior researcher at GG Auction.

Samseong-dong Posco The Sharp in Samseong-dong, Gangnam-gu, Seoul. [Naver Street View]

GG Auction's analysis shows that even if the penthouse sells at its full appraised value, the banks holding the senior mortgage would receive about 4.8 billion won first. Seol's share is expected to amount to no more than around 100 million won.

A similar outcome played out last month when another property owned by Baek — a 152-square-meter unit at Trimaje — sold at its third auction for about 5.9 billion won. Seol is understood to have recovered only a small portion of his claim there as well, due to his junior creditor status. Singer Kim Jae-joong had also filed a provisional seizure on that unit. The Trimaje property went through multiple failed auctions before finally selling last month at 1.52 billion won below its original appraised value of 7.39 billion won.

The trend extends beyond these cases. High-end apartments across the Gangnam area have been trading at discounts, and the premium auction market is seeing a string of sales well below appraised values. A 115-square-meter unit at Daelim Apartments in Ichon-dong, Yongsan-gu sold Wednesday for 2.82 billion won ($2.08 million), below its appraised value of 3.03 billion won, at its second auction. A 153.9-square-meter unit at Hyundai Supervill in Seocho-dong, Seocho-gu sold Wednesday at its second auction for 2.4 billion won — 400 million won below its appraised value of 2.8 billion won.

"When high-value properties sell below market price due to weak demand, creditors also end up recovering less than they are owed," Lee said. "If the market deteriorates further, the damage could spread to banks and other financial institutions as well," he added.

hope@heraldcorp.com