Seoul Officetel Subscription Heats Up While Sales Market Pauses

Seoul Area Sold-Out Streak
Hillstate Cheongnyangni A 21 to 1
Sinnae Station City Pradium 3.6 to 1

Sale Price Index Down 0.02%
First Decline in 10 Months
Yield 4.8%, Lowest in 5 Months

[Asia Economy Reporter Donghyun Choi] The gap between the sales and resale markets of officetels in the Seoul area is widening. While the sales market continues a streak of sellouts amid high competition, the prices of existing officetels turned downward last month for the first time in 10 months. Some analysts suggest that idle funds in the market, unable to find suitable investment destinations, are flowing into officetels.

According to Korea Real Estate Agency's subscription website on the 2nd, officetels supplied in the Seoul area this year have without exception attracted a large number of applicants, maintaining high popularity. For example, the 'Hillstate Cheongnyangni The First B Block' officetel in Jeonnong-dong, Dongdaemun-gu, offered 315 units and received 3,254 applications, recording a competition rate of 10.3 to 1. For the 84㎡ (exclusive area) penthouse units, priced at around 1.1 billion KRW, 93 applicants applied under resident priority supply and 121 under other supply categories. The A Block of the same officetel, which supplied 171 units, received 3,620 applications, closing with an average competition rate of 21.1 to 1. An industry insider explained, "The high popularity is due to its location right in front of Cheongnyangni Station, where 10 subway lines are planned to pass in the future," adding, "Compared to apartments, regulations such as loans are less strict, leading to a recent surge in inquiries about officetel subscriptions."

The 'Sinnae Station City Pradium' officetel in Yangwon Public Housing District, Jungnang-gu, which was supplied at the end of last month, also closed with an average competition rate of 3.6 to 1, receiving 3,408 applications for 943 units. Meanwhile, the 'Ssangyong The Platinum Seoul Station' officetel in Jungnim-dong, Jung-gu, recorded an average competition rate of 4.2 to 1 with 2,388 applications for 569 units during its February sale.

These subscription results contrast sharply with the existing officetel resale market situation. According to Korea Real Estate Agency statistics, the Seoul officetel resale price index fell by 0.02% last month, marking a decline for the first time in 10 months. The resale prices of Seoul officetels had been rising since August last year but slowed sharply after the December 16 real estate measures. In particular, small officetels under 40㎡, which are in high demand from single-person households, saw a relatively larger decline of 0.03%. The yield on officetels also remained at 4.83% last month, the lowest level since the statistics began in 2018, stagnating for five consecutive months.

However, monthly rent and jeonse (long-term deposit lease) prices are on the rise. The jeonse price index has increased for 12 consecutive months, and the monthly rent price index rebounded last month after a temporary dip. Notably, the jeonse-to-monthly rent conversion rate rose to 5.05%, rebounding last month after four months of decline this year. This conversion rate is the annual interest rate applied when converting a jeonse deposit to a semi-jeonse or monthly rent. A higher rate means a relatively higher burden for monthly rent compared to jeonse. A representative from a real estate agency in Mapo-gu said, "Due to the base interest rate cuts and other factors, jeonse listings have become scarce, leading many to convert officetel jeonse contracts into semi-jeonse or monthly rent," adding, "In prime locations, landlords facing increased property taxes sometimes raise prices for monthly rent." Residential officetels are subject to housing property tax and comprehensive real estate tax.

Experts predict that demand concentration on new officetels will further expand. Hyuntaek Cho, a research fellow at the Commercial Information Research Institute, said, "Because officetels depreciate significantly, the price polarization between old and new buildings is more severe than in apartments," and added, "With apartment supply expected to decrease due to various regulations, demand for new officetels as substitutes will increase."

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