"Regulatory Balloon Effect"... Sharp Increase in Officetel Transactions in July

Over 4,500 Nationwide Officetel Sales Transactions in July, Highest Monthly Record Since Data Collection
"Concentration in Seoul and Metropolitan Area... Demand Polarization Expected to Intensify Based on Location and Product"

On the 19th, the government decided to lower the jeonse-to-monthly rent conversion rate from the existing 4% to around 2.5%. Hong Nam-ki, Deputy Prime Minister and Minister of Economy and Finance, stated at the meeting of ministers in charge of real estate market inspection that the current 4% conversion rate could accelerate the trend toward monthly rent and increase the burden on tenants, leading to this decision. The photo shows a real estate agency in Jamsil, Seoul on the same day. Photo by Moon Honam munonam@

[Asia Economy Reporter Yuri Kim] The volume of officetel transactions, which have been in the blind spot of government real estate regulations, has surged. Unlike apartments, which have been directly hit by successive real estate measures, demand is shifting toward officetels, which are relatively free from regulations.

According to the Commercial Information Research Institute on the 30th, based on the Ministry of Land, Infrastructure and Transport's actual transaction price disclosure system as of the 24th, the nationwide officetel sales volume in July this year totaled 4,504 cases, a sharp increase of 1,762 cases (64.3%) compared to 2,742 cases in the same month last year. This is the highest monthly figure since related statistics began in 2006, surpassing the previous record of 3,573 cases in July 2016.

The region with the highest number of officetel sales transactions nationwide was Seoul, with a total of 1,612 cases. This was followed by ▲Gyeonggi (1,215 cases) ▲Busan (493 cases) ▲Incheon (452 cases).

Due to the impact of real estate measures, sales volume increased mainly in the metropolitan area. Sales prices also rose compared to the previous month. In July this year, the average sales price per 3.3㎡ of officetels nationwide was 16.47 million KRW, up 900,000 KRW (5.8%) from 15.57 million KRW in the previous month. In Seoul, it increased by 300,000 KRW from 24.46 million KRW to 24.76 million KRW.

Researcher Hyuntaek Cho of the Commercial Information Research Institute said, "Due to recent successive apartment regulations, demand and interest in other real estate products, especially income-generating real estate relatively free from regulations, have increased. Among them, officetels, which are alternative residential real estate products, are not counted as housing units when applying for subscription, and can be used for housing rental businesses, have seen increased demand, leading to higher transaction volumes and rising prices."

He added, "However, this demand is mostly concentrated in the metropolitan area including Seoul, and shows a skewed pattern depending on region, location, and product, so the polarization phenomenon in the officetel market is expected to deepen further."

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