Popularity of Knowledge Centers and Saengsuk Facilities Avoiding Apartment Regulations

[Asia Economy Reporter Choi Dong-hyun] Due to the government's strengthened housing market regulations and prolonged low interest rates, demand for income-generating real estate such as knowledge industry centers and residential-type lodging facilities is increasing.

According to the Korea Real Estate Board on the 2nd, nationwide transactions of income-generating real estate (excluding officetels) steadily declined from January to April but rebounded from May, increasing for three consecutive months. In particular, the transaction volume in July reached 18,167 cases, marking the highest level in 2 years and 4 months since March 2018 (18,751 cases). Although the transaction volume last month slightly decreased to 16,155 cases compared to the previous month, it still maintained a high level compared to the first half of the year.

Among income-generating real estate, residential-type lodging facilities have recently attracted attention. Known as "residences," these facilities combine the advantages of apartments and hotels. They do not require subscription savings accounts, are not subject to loan regulations, and have flexible resale restrictions. Additionally, individual registration is possible like apartments, allowing owners to easily realize capital gains when prices rise. Unlike officetels, lodging business is permitted, making them relatively profitable. They are not subject to the two-homeowner rule, thus exempt from capital gains tax surcharges and comprehensive real estate tax.

Last month, the residential-type lodging facility "Hillstate Songdo Stay Edition" in Songdo-dong, Yeonsu-gu, Incheon, attracted 65,498 subscription applications for 608 units, recording an average competition rate of 107 to 1. Especially for the extra-large units of 167~191㎡ (exclusive area), 8,276 applications were received for 6 units, showing the highest competition rate of 1,379 to 1. In August, the "Pyeongchon Prugio Central Park" in Gwanyang-dong, Dongan-gu, Anyang-si, Gyeonggi Province, also received 66,704 applications for 552 units, with an average competition rate of 121 to 1 and a highest competition rate of 267 to 1. In July, Shinsegae Construction's "Belive Paragraph Haeundae" in Haeundae-gu, Busan, attracted 9,873 applicants for 254 units, recording an average competition rate of 38.8 to 1 and a highest competition rate of 266.9 to 1.

Knowledge industry centers are also among the recently spotlighted income-generating real estate. According to the Korea Industrial Complex Corporation, the number of knowledge industry center approvals in the first quarter of this year reached 51, marking a quarterly record high. The annual approval numbers also show a noticeable increase: 78 in 2017, 107 in 2018, and 149 in 2019. Unlike housing, knowledge industry centers allow loans up to 80% of the total sale price. By utilizing government-supported policy funds, leverage can be increased up to 90% of the sale price, and there are no resale restrictions. Occupying companies also receive reductions in property tax (37.5%) and acquisition tax (50%).

Knowledge industry centers located in major business districts such as Gangnam are showing price appreciation trends comparable to apartments. The 16㎡ unit price of "Utop Tech Valley" in Munjeong-dong, Songpa-gu, Seoul, completed in December 2015, is currently around 420 million KRW, about 1.5 times the sale price (275.08 million KRW). In the same area, the 20㎡ unit price of "SK V1 GL Metrocity," completed in December 2017, has risen to 800 million KRW, more than double the sale price (370.95 million KRW).

Knowledge industry centers are popular not only for investment returns but also among companies seeking actual occupancy. Recently, many knowledge industry centers are located within industrial complexes, as it is easier to form industry-academic-research clusters with companies in the same sector within industrial complexes. According to data released by the Korea Industrial Complex Corporation, the proportion of knowledge industry centers located within industrial complexes increased significantly from 23.59% in 2016 to 42.50% this year. Kwon Il, head of the Real Estate Info research team, said, "With the Fourth Industrial Revolution changing the corporate ecosystem, industrial facilities are moving to locations with more collaboration opportunities and spaces with more convenient systems. It is especially important to pay attention to new knowledge industry centers built in places where industrial clusters with large corporations are facilitated."

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