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A lavish Lotte residence - if you can afford it

Mar 13,2017
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Left: Lotte World Tower. From top: View of skyline from the Signiel Residences, living room and kitchen. [LOTTE]
Jamsil in southeastern Seoul, once a breeding ground for silkworms during the Joseon Dynasty, will soon be home to the most expensive residential real estate in Korea.

Apartments in the Lotte Signiel Residences, encompassing the 42nd to 71st floors of the 123-story Lotte World Tower, currently the tallest skyscraper in the country, will go for 75 million won per 3.3 square meters ($1,825 per square foot). The going rate of the 223 units will range from 4.2 billion won to 38 billion won, making them the most expensive in Korea.

Before the Signiel, the record was held by the Pie’n Polus in upscale Cheongdam-dong, southern Seoul, where the lowest listed price was 4 billion won.

“Each unit will be decked with high-quality finishing materials,” Lotte said in a statement, “and we will provide residents with the services of a six-star hotel, not to mention a spectacular view.” Services will include apartment upkeep and valet parking.

But along with the perks come sizable taxes. Buyers will first have to pay a one-time acquisition tax of 3.5 percent, which can range from 147 million to 1.3 billion won.

And that’s just the tip of the iceberg. Occupants will then have to pay an annual real estate tax that includes a property tax and comprehensive real estate holding tax. The property tax rate ranges from 0.1 to 0.4 percent, while the comprehensive real estate holding tax is based on the number of residential properties owned by the individual and can go from 0.5 to 2 percent.

For the lowest-priced unit, the occupant will have to pay an annual real estate tax of 30 million won - 9 million won as a property tax and 21 million won as a comprehensive real estate holding tax based on a single holding.

For the most expensive unit, the tax jumps over 20 times to 630 million won. By comparison, the average price of an apartment in Seoul is about 560 million won, according to the Korea Appraisal Board, which means the real estate tax alone on the most expensive Signiel unit could easily buy an apartment in Seoul.

Since construction is already complete, purchases of apartments in the Signiel before June 1 will be taxed this year.

Real estate market watchers are skeptical that Lotte will be able to sell all the units, which are worth a total 2 trillion won, largely because the number of wealthy people who can afford such an extravagant residence is limited. Only 541 individuals in Korea have property worth over 5 billion won, and only 64 have real estate worth over 10 billion won, according to the National Tax Service. Only about 800 individuals in Korea own financial assets worth over 20 billion won, based on a report by KB Financial Group’s research unit.

So Lotte is looking across the sea to China in hopes that the country’s nouveau riche will be interested in the property. The company has even held informational sessions there to pitch the apartments to potential buyers.

But the likelihood that wealthy Chinese might fill up the units seems bleak at best now that China has begun to retaliate against Korean companies. Beijing has expressed outrage at the Korean government’s decision to deploy a U.S. missile defense system in the region and has used apparent trade restrictions to punish Korea.

“We got a lot fewer calls from China since China began its backlash,” a spokesperson for the Signiel said.

Kim Shin-jo, president of iNex Housing, a real estate marketing firm, said, “Given the price and tax burden, it will take a long time before all the units are sold.”


BY AHN JANG-WON [choi.hyungjo@joongang.co.kr]