Real Estate Lotto Without Principal Loss... Concerns Over 'Saengsuk' Hot Potato Game

Investment Frenzy in Non-Residential Products like Lifestyle Accommodation Facilities (Saengsuk)
Speculative Game with No Principal Loss "Just Take the Initial Fee and Exit"
No Penalty for Cancellation After Winning... Concerns Over "Overheated Investment Sentiment"

Appearance of real estate agencies in downtown Seoul

"If you win, you can make tens of millions of won immediately, so not applying for the subscription is foolish. Even if you lose, you don't suffer any loss..."

Housewife B (49) has applied over 200 times this year alone for lifestyle accommodation facilities (Saengsuk), officetels, and urban lifestyle housing. Although she has never been lucky enough to win, checking the sales information of major construction companies daily and applying according to the schedule remains an important part of her routine.

The main reason behind the recent 'subscription war' for non-residential products such as lifestyle accommodation facilities (Saengsuk) is primarily the strong regulations on apartments. Unlike apartments, which have high barriers for subscription, loans, and resale, these non-residential products have almost no regulatory hurdles, attracting investors aiming for short-term capital gains.

◇Better than stocks... A lotto game with no principal loss= Even for the most heated subscription item, Saengsuk, the Building Act applies instead of the Housing Act, so legally it is not considered a 'house.' Since it is not classified as a house, comprehensive real estate tax and capital gains tax are not heavily imposed. Anyone aged 19 or older can apply regardless of having a subscription savings account, being a multi-homeowner, or their residential area. After winning the subscription, paying only 10% of the contract amount allows immediate resale.

Ham Jin-young, head of the Zigbang Big Data Lab, said, "While the hurdles in the housing sales market such as being a non-homeowner household head, number of dependents, and subscription savings account subscription period are very high, Saengsuk and similar products have freer regulations, leading to increased investment demand." He added, "Basically, the abundant liquidity in the market is also driving investment demand."

Non-residential products have no disadvantages related to subscription. If the 'chopi' (premium formed immediately after winning) does not form as expected, one can simply forgo the winning. Although there is a subscription application fee, it is 100% refundable regardless of winning or contract status. It is essentially a 'lotto' with no worry about principal loss.

C, who applied for the subscription of 'Lotte Castle Le West' in Magok-dong, Gangseo-gu, Seoul, said, "There were concerns that the price was too high and a 'mapi' (selling the subscription right at a loss) might occur, but since I could just not sign the contract after seeing the atmosphere, I was not worried." The subscription application fee for Lotte Castle Le West is 2 million won. One person can apply up to 5 times, so with a maximum of 10 million won, one can expect profits of tens of millions of won, according to him.

◇Knowledge Industry Centers also bustling= Knowledge Industry Centers (Jisan), formerly called 'apartment-type factories,' are also crowded with investors. These are multi-story buildings mainly occupied by small and medium-sized enterprises that find it difficult to build small factories or offices. They mainly accept business tenants aiming for stable rental income. They are excluded from housing count, property tax, capital gains tax, and other taxes. Buyers can even receive VAT refunds. Unless the center is located in an industrial complex, resale of subscription rights is possible, and loans up to 80% are available.

D, who recently purchased a Knowledge Industry Center in Goyang, Gyeonggi Province, said, "The price was affordable at 300 million won, and the condition was to pay only 10% of the contract amount, so I purchased it." He added, "There was a chopi of about 15 million won, but since the interim payment is fully interest-free loan, I plan to wait longer without selling for now."

According to an analysis of Korea Industrial Complex Corporation data by the commercial real estate research and development company Sangga Information Research Institute, 36 Knowledge Industry Centers received new or changed approvals in the first quarter of this year (January to March). This is the highest number since related statistics began in 1987. The expected building area reaches 1,428,689 square meters.

◇Concerns over exaggerated returns of Saengsuk and Jisan= Although investment accessibility is high, experts advise that non-residential products require much more cautious approaches than apartments.

In the case of Saengsuk, some developers or brokers advertise that "residence or rental is possible," but legally, residential use is not allowed. Earlier this year, the government clearly stated that Saengsuk cannot be used as housing and requires lodging business registration. They warned that penalties would be imposed on facilities already used as housing.

Ham Jin-young of Zigbang Big Data Lab said, "Since Saengsuk is difficult for actual residence, it must be operated as lodging facilities," and "non-residential products are basically not intended for profit from price differences." He added, "Compared to apartments, liquidity is lower and transaction volume is smaller. If approaching for resale, one must carefully select locations with high accessibility and preference."

Ko Jun-seok, adjunct professor at Dongguk University Law School, said, "The non-residential product market is the first to be hit during economic downturns in the real estate market," urging cautious approaches. Seo Jin-hyung, president of the Korea Real Estate Society (professor at Gyeongin Women's University), advised, "Although Saengsuk and Jisan emphasize returns in promotions, there is no guaranteed fixed return. Returns are often exaggerated, so investors should thoroughly examine whether the returns relative to investment amount are achievable."

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