2020 Deja Vu: 10,000 on the Move... Will Sejong Home Prices Rise? [Practical Investing]

Additional relocation of central government agencies from the Seoul metropolitan area
Jeonse price index up 4.99% through October
Temporary move-in gap and rising demand to upgrade homes
Living Area 5-1 draws interest with its concentration of advanced infrastructure

With the additional relocation of central government agencies from the Seoul metropolitan area confirmed, attention is turning to whether home prices in Sejong City will begin a sustained rebound. The presidential office in Sejong and the National Assembly Sejong Building are moving forward, while major development projects such as the Chungcheong Regional Express Train (CTX) and a smart city are adding to the area’s prospects. Home prices rose sharply in 2020 and 2021, when momentum grew for relocating the administrative capital and new apartment move-ins temporarily declined. With the administrative-capital issue back in focus, forecasts suggest prices will rise again, led by prime locations.

The first major relocation of central government agencies, which began in earnest in 2012, gave Sejong’s Multifunctional Administrative City its basic framework. The city saw little major change afterward, but it has drawn renewed attention under the current administration as plans for additional relocations and other measures have been confirmed in succession. In August, the government finalized completion dates for the presidential office in Sejong (August 2029) and the National Assembly Sejong Building (the second half of 2033). The budget proposed for the National Agency for Administrative City Construction (NAACC) next year is KRW 568.9 billion, roughly double this year’s amount. Construction costs for the presidential office, with work targeted to begin in the second half of next year, and the basic design costs for the National Assembly Sejong Building together account for more than half of the budget.

Government Complex Sejong and nearby private buildings. Yonhap News Agency

Under the recently confirmed plan for the second relocation of central government agencies, 2,995 employees from 27 agencies, including the Financial Services Commission, will move first into leased offices. Another 6,934 employees from 17 agencies, including the Ministry of Foreign Affairs, the Ministry of National Defense and the Ministry of Unification, are scheduled to relocate in stages by 2031, after new offices are built. In total, nearly 10,000 public officials are expected to move to the area. A third-party proposal notice for the CTX, which will connect Daejeon, Sejong and Cheongju Airport within a 30-minute travel area, is expected to be issued by the end of this year.

The housing market is responding quickly as major government-backed projects enter the implementation phase. According to the Korea Real Estate Board, the apartment jeonse price index in Sejong rose 4.99% from the start of this year through the third week of October. That is 2.8 times the average increase in provincial areas, at 1.75%. Data compiled by Asil, a real estate information provider, show that apartment rental listings, including officetels, fell by about 36%, from 1,421 at the start of the year to 913. That is the lowest level in three years.

Demand for new apartment subscriptions is already surging. From last year through October this year, Sejong recorded an average first-priority subscription competition ratio of 14.21 to 1, far above the national average of 5.67 to 1. It ranked second nationwide, behind Seoul. In the monthly real estate consumer sentiment survey compiled by the Korea Research Institute for Human Settlements, Sejong’s housing market consumer sentiment index stood at 125.1 last month, the second-highest in the country after Seoul.

Rising interest in new apartments is thought to reflect a temporary gap in move-ins and growing demand from residents looking to upgrade as their homes pass the 10-year mark after completion. Of the 115,306 homes that had been occupied in the Multifunctional Administrative City through last year, 41,285 apartments were more than 10 years old, accounting for over one-third of the total. This share will exceed half by 2028. No apartment move-ins are scheduled in Sejong this year or next year, and only 1,765 units are expected the following year.

The development of a national smart city pilot project in Living Area 5-1 is also moving forward in earnest. The pilot city strategy was drawn up in 2018, and the implementation plan for the smart city construction project was approved this March. Smart services in areas such as transportation, healthcare and education will be introduced in stages across Living Area 5-1, which is being developed on a site of about 2.74 million square meters in Hapgang-dong. From the perspective of residents’ daily lives, shared-car-based autonomous driving and an artificial intelligence (AI)-based smart transportation system will support travel outside the residential complex, while service robots that assist with deliveries and carrying luggage, as well as patrol robots, will support life within it. The smart city project has a total budget of KRW 3.1636 trillion.

According to Sejong City, a total of 4,740 apartment units are planned for supply this year, with about half of them in Living Area 5-1. The units will be offered next month in the Smart Living Zone, designated as a flagship district within the pilot city. BS Hanyang is building the development across four blocks (L6, L7, L8 and L11), with a total of 2,316 units, comprising 2,191 apartments and 125 officetel units. Daily-life infrastructure will also be introduced in stages alongside the large-scale residential facilities. Sites for kindergartens and elementary, middle and high schools are planned near the complex, and NAACC and the Sejong City Office of Education are building a science and culture center targeted to open in 2029.

Apartment prices in Sejong have surged in the past, spurred in part by political debate over relocating the administrative capital. Prices rose by more than 40% in 2020 alone. At the time, low interest rates boosted market liquidity, while people moved in from nearby Daejeon, Cheongju and Gongju, and investment demand from outside the region also poured in.

Prices then plunged amid rising interest rates, calls to slow the pace of the administrative-capital relocation and low jeonse-to-sale price ratios. Industry officials say signs of a home-price rebound are now unmistakable, led by demand from people planning to live in the area, as jeonse prices rise amid various recent policy developments. “Since the announcement of the government-agency relocations, we’ve seen a sharp increase in inquiries about the sales schedule for Living Area 5-1,” said a licensed real estate agent in Sejong City. “Interest is high among people looking for a home to live in because workplaces, schools and advanced infrastructure are concentrated in one living area.”

Artist's rendering of Sejong Smart City L Sujain. Provided by BS Hanyang.

This content was produced with the assistance of AI translation services.