Aegis Asset Management: "Officetels Gain Competitiveness by Offering Services Tailored to Single-Person Household Needs"

[Asia Economy Reporter Park Jihwan] In the case of officetels, which can generate rental income with a small amount of investment, providing differentiated services tailored to the preferences of single-person households is expected to become a key competitive advantage.

Aegis Asset Management Research Center released a report on the "Seoul Officetel Market Trends" on the 15th, covering this topic. The report analyzed the demand, supply characteristics, and price trends of officetels in the five major living areas of Seoul (Downtown, Southeast, Northeast, Southwest, Northwest).

According to the report, officetels are highly preferred by young single-person households who prioritize convenient and safe living environments. However, since the rent per pyeong (Korean unit of area) is higher than other housing types, there is a burden on the housing costs for the demand group, resulting in a relatively short average residence period of about 1.5 years.

Officetels have shown a steady increase in supply since 2006, following the relaxation of building standard regulations. Approximately 29% of the total officetel stock was newly built in the past five years. This creates a structure where competition to attract tenants among newly built officetels is inevitable.

However, the volume of permits and construction starts for new supply is relatively high at about 17.2% of the total stock, and following the announcement of the price ceiling system in 2019, the supply growth is expected to slow down in the future.

The report analyzed that regarding officetel price trends, the relaxation of building standards in 2009 and the government's designation of officetels as "quasi-housing" in 2010 to address housing issues for one- and two-person households helped maintain a price increase trend, unlike apartments and multi-family houses.

In 2014, with the easing of loan regulations such as LTV and DTI, prices continued to rise similarly to other housing types. However, due to the real estate regulatory policies announced in December last year, which imposed property tax and comprehensive real estate holding tax, price adjustments are anticipated.

Furthermore, despite the increase in single-person households, the report explained that frequent tenant turnover caused by continuous supply and the burden of monthly rent limits the rise in monthly rent prices. Consequently, the demand group prefers jeonse (a lump-sum deposit lease), and jeonse prices have shown continuous increases.

An official from Aegis Asset Management stated, "Officetels that reduce the burden of monthly rent and provide differentiated services tailored to the preferences of single-person households will have competitiveness."

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