Samsung Electronics' internal loan program expected to release more than 1 trillion won

Record-high transactions continue in Yeongtong and Dongtan as employees grow anxious

Apartment complexes in Dongtan-gu, Hwaseong, Gyeonggi Province. [Yonhap]
Apartment complexes in Dongtan-gu, Hwaseong, Gyeonggi Province. [Yonhap]

"The shuttle-bus corridor apartments already saw a wave of transactions. Now we're seeing fresh buying inquiries near the high-end market around Dongtan Station." (A real estate agent near Hillstate Dongtan in Mokdong, Dongtan-gu, Hwaseong)

"It sounds like the internal loans are about to be cut off. I'd better buy quickly." (Samsung Electronics online employee forum)

As the government announced it is reviewing regulations on corporate internal loans — programs that have released more than 1 trillion won ($755 million) — record-high apartment transactions are continuing across southern Gyeonggi Province, the area known as the "semiconductor belt." Market watchers say the prospect of tighter rules could trigger a rush of last-chance buyers.

According to the real estate industry, an 84-square-meter unit at Hillstate Dongtan — widely known as a "shuttle-bus corridor" complex — recently changed hands at 1.18 billion won, setting a new record high. The transaction has yet to be officially registered and surpasses the previous record of 1.11 billion won by 60 million won.

Hillstate Dongtan is a prime example of a so-called "shuttle-bus corridor" complex, popular among employees of Samsung Electronics' Hwaseong campus. Actual transaction prices at the complex climbed further after Samsung Electronics launched its internal loan program last month.

A nearby real estate agent said the market had quieted after an initial wave of transactions pushed prices to record highs. "The shuttle-bus corridor area here tends to move only after the high-end market near Dongtan Station leads the way," the agent said. "We're seeing fresh buying inquiries near Dongtan Station again, so the market is starting to stir."

The initial surge in buying activity appears to have concentrated in areas with apartments priced around 1 billion won, coinciding with the launch of Samsung Electronics' internal loan program last month. A 59-square-meter unit at Yeongton SK View in Yeongtong-gu, Suwon, sold for 970 million won on Thursday, setting a new record. A larger 84-square-meter unit at the same complex also changed hands at an all-time high of 1.17 billion won on Oct. 2.

With record-high transactions continuing, market observers say the government's review of internal loan regulations could intensify last-chance buying demand even further. Financial authorities had previously said they were reviewing regulations on corporate internal loans similar to those applied to bank lending.

Financial Services Commission Chairman Lee Eok-won (right) answers questions from lawmakers during the National Assembly's Political Affairs Committee national audit on Thursday. At left is Financial Supervisory Service Director Lee Chan-jin. [Yonhap]
Financial Services Commission Chairman Lee Eok-won (right) answers questions from lawmakers during the National Assembly's Political Affairs Committee national audit on Thursday. At left is Financial Supervisory Service Director Lee Chan-jin. [Yonhap]

Financial Supervisory Service Director Lee Chan-jin appeared before the National Assembly's Political Affairs Committee national audit on Thursday. People Power Party lawmaker Song Eon-seog asked whether regulators had completed their review of applying debt service ratio or loan-to-value ratio requirements to corporate internal loans — a review Song said Lee had pledged to conduct back in June. Song framed the question around a choice: either ease mortgage regulations on ordinary citizens or subject internal loans to the same rules. Lee replied, "We are in discussions with the FSC. Talks are still only at the working level."

According to Song, the launch of Samsung Electronics' internal loan program last month has drawn attention to corporate internal loans as a regulatory blind spot. His office said public institutions hold 102 billion won in internal loans, 29 securities firms hold a combined 170 billion won, and seven major conglomerates account for 630 billion won. With Samsung Electronics offering up to 500 million won per employee, the total volume released through its program alone is estimated to exceed 1 trillion won.

The uncertainty has sparked anxiety among Samsung Electronics employees. One employee said they believed their mortgage would not be affected because housing loan regulations are applied based on the date a contract is signed, but added: "I'm paying the final balance in January and I'm terribly worried about whether I'll be caught by the new rules."

Another employee said they were considering what amounted to panic buying. "It seems like the loans are about to be cut off, so I need to find a place quickly," the employee wrote on an internal forum.

However, the legal basis for financial authorities to regulate corporate internal loans has yet to be publicly debated. FSC Chairman Lee Eok-won said at the national audit that regulators would need to think carefully about "how to approach this methodologically." He added that because Samsung's internal loan program requires borrowers to register a mortgage lien, the risk of employees using those loans as collateral to take out additional financing from banks may already be reduced.


hss@heraldcorp.com