Frozen Officetel Market... Up to 440 Million KRW Drop in New Towns of the Seoul Metropolitan Area

January sales at 1,831 cases, half the previous month
DSR regulations applied from this year... demand expected to drop further
New towns like Wirye, Gwanggyo, Ilsan see actual transaction prices fall by billions

A view of an officetel in downtown Seoul (Photo by Yonhap News)

[Asia Economy Reporter Ryu Taemin] As the apartment market in the Seoul metropolitan area slows down, the sales of residential officetels, which had been gaining attention as an alternative to apartments, are also freezing up. In major areas such as Wirye, Gwanggyo, and Ilsan, where price increases had been leading the market, there are frequent cases of price drops, leading to forecasts that demand will sharply decline compared to before.

According to the Ministry of Land, Infrastructure and Transport's real transaction price disclosure system on the 3rd, the number of officetel sales transactions in the metropolitan area last month was recorded at a total of 1,831 cases. This is about half compared to December last year (3,566 cases). Although the deadline for transaction registration reporting has not yet passed, it is expected that the trend of decreasing transaction volume will be difficult to reverse.

Last year, as apartment prices in Seoul and other metropolitan areas soared to unprecedented levels, residential officetels, considered an alternative, attracted attention. Unlike apartments, which had strict loan-related regulations, officetels could receive up to 70% financing regardless of market price. Additionally, officetel subscription did not require a separate subscription savings account and was not counted as a housing unit, allowing multi-homeowners to apply, which was also highlighted.

However, this year, with the full application of the Debt Service Ratio (DSR) regulations to officetels, demand has sharply decreased. The regulation that DSR cannot exceed 40% if the total loan amount exceeds 200 million KRW has been fully enforced, raising the entry barrier. Furthermore, as the overall housing market, including apartments, slows down due to price fatigue and interest rate hikes, the reduction in both actual residence and investment demand appears to have impacted the residential officetel market as well. Song Seunghyun, CEO of Urban and Economy, explained, "As the recent rise in the apartment market has slowed, residential officetels are also showing a simultaneous decline. In particular, the cooling of enthusiasm for subscription-based investment seems to have contributed to the reduction in investment demand."

With Buying Demand Frozen, Listings Accumulate and Price-Drop Transactions Increase

By region, the cooling phenomenon in the officetel market is clearly observed. In Seoul, the number of officetel sales transactions was 1,790 in December last year, surpassing Gyeonggi Province (1,350 cases), but last month it dropped by more than 1,000 cases to 741, falling behind Gyeonggi (819 cases). During the same period, transactions in Incheon also decreased by 171 cases (38.6%), from 442 to 271.

In major new towns in the metropolitan area such as Wirye, Gwanggyo, and Ilsan, there have been cases where actual transaction prices fell by several hundred million KRW compared to previous transactions. According to the same data, the Hills State Gwanggyo officetel 77.5㎡ (exclusive area) in Hadong, Yeongtong-gu, Suwon-si, Gyeonggi Province, was transacted at 1.01 billion KRW in November last year, which is 440 million KRW lower than the previous highest price of 1.45 billion KRW (September 2). The nearby Gwanggyo Hills State Lake 84.8㎡ reached a record high of 1.045 billion KRW in July last year but changed hands at 840 million KRW on the 18th of last month, dropping by more than 200 million KRW.

The Wirye Jiwell Prugio officetel 84.7㎡ in Hakam-dong, Hanam-si, part of Wirye New Town, recorded a peak price of 1.44 billion KRW in August last year but was sold for 1.3 billion KRW on the 11th of last month, falling by 140 million KRW. The Kintex Dream Green officetel 84.1㎡ near Kintex in Ilsan New Town was traded at 852 million KRW in November last year, 78 million KRW lower than the highest price three months earlier (September 930 million KRW).

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