Apartment Sales Stall, Officetels Surge

As Apartment Listings Disappear
Floating Funds Move to Officetels
Sales Prices Rise for 5 Consecutive Months
Strong Demand for Medium to Large Units

[Asia Economy Reporter Donghyun Choi] Recently, as listings have been locked up and prices have steadily risen in the Seoul apartment sales market, some liquidity is entering the officetel market. Unlike in the past when small to medium-sized units attracted attention due to the increase in single-person households, recently, demand for medium to large-sized units with good proximity to workplaces has increased, leading to growing demand for a 'smart single unit' in officetels as well.

According to the Korea Real Estate Board on the 7th, the Seoul officetel sales price index rose by 0.18% compared to the previous month, continuing an upward trend for five consecutive months. Last month’s price increase was the largest throughout last year. Seoul officetel prices had been steadily declining since early last year but reversed to an upward trend from August last year when the application of the private land price ceiling system became visible.

By area, the price increase was particularly notable for units exceeding 40㎡ (exclusive area). Last month, the Seoul officetel sales price index for units over 40㎡ rose by 0.36%, marking the highest increase in 15 months since September 2018.

As of last month, the median price of officetels in Seoul was 202.2 million KRW. By region, the downtown area (Jongno, Jung, Yongsan districts) was the most expensive at 283.23 million KRW, followed by the southeast area (Seocho, Gangnam, Songpa, Gangdong districts) at 246.21 million KRW, and the northwest area (Eunpyeong, Seodaemun, Mapo districts) at 192.69 million KRW, with prices higher around business districts.

High-priced officetel sales exceeding 900 million KRW are also occurring frequently. On the 24th of last month, a 163㎡ unit at SK Leaders View in Dogok-dong, Gangnam-gu, was sold for 1.7 billion KRW. Compared to a 168㎡ unit sold for 1.6 billion KRW two months earlier in October last year, this is 100 million KRW higher. In December last year, a 149㎡ unit at The Sharp Star City in Jayang-dong, Gwangjin-gu, was sold for 1.25 billion KRW, rising 250 million KRW compared to six months prior. Experts analyze that officetels are relatively free from government regulations related to taxes and loans and can be purchased regardless of subscription savings accounts or the number of owned houses, so expectations of a 'spillover benefit' from the 'December 12 and 16 measures' are stimulating investment sentiment.

Competition is also intensifying in the subscription market, especially in well-located areas. 'Hillstate Cheonho Station Gentris' in Gangdong-gu, Seoul, which closed applications on the 3rd of last month, received 842 applications for 182 units, selling out completely. The highest competition rate exceeded 17 to 1. The resident priority subscription rate for 'Kondaeipgu Station Xiella' in Jayang-dong, Gwangjin-gu, supplied in October last year, also soared to an average of 35 to 1.

Due to the base interest rate cuts and apartment market regulations, interest in officetels is expected to grow further for the time being. Hyuntaek Cho, a researcher at the Commercial Information Research Institute, said, "After the December 12 and 16 measures, investment in apartments has become difficult, and much liquidity is hovering around the officetel market. In particular, demand and supply for medium to large-sized units for actual residence have been increasing recently, and large construction companies are also intensifying their competition for orders."

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