Even the once wildly popular Apatel craze has subsided

Seoul·Incheon Officetel Price Index Growth Rate Falls for First Time in 14 Months
Last Year Recorded Highest Ever Transactions... Sharp Cooling Due to Loan Regulations

[Image source=Yonhap News]

Last month, the price index growth rate for officetels in Seoul and Incheon fell for the first time in 14 months. Among officetels, residential-type products, commonly known as apartels, sparked an investment frenzy last year as an alternative to apartments, recording the highest transaction volume ever.

According to the 'Monthly KB Real Estate Market Review' released by KB Management Research Institute on the 15th, the price index change rate for officetels in Seoul in January this year was 9.3% compared to the same month last year. This is 0.6 percentage points lower than the 9.9% increase recorded in December last year. In Incheon, it decreased by 0.5 percentage points from 19.2% in December last year to 18.7% in January this year. Seoul and Incheon had been increasing their price index growth rates every month since November 2020, but the growth slowed this year, breaking the upward trend for the first time in 14 months. The Gyeonggi region, which had seen a slowdown in growth since the second half of last year, saw its January growth rate drop by more than 3.0 percentage points from 17.03% in the previous month to 14.01%. Nationwide, the officetel price index change rate also decreased by 1.7% from the previous month to 12.4% in January.

Officetels, especially apartels, saw a surge in demand last year due to the balloon effect of apartment regulations. The supply of units with the same internal structure as apartments increased, and apartels were highlighted for their lower price burden compared to apartments and their ability to avoid various real estate regulations.

According to actual transaction data from the Ministry of Land, Infrastructure and Transport, the total number of officetel sales nationwide last year was 60,385, a 23.78% increase from 48,768 the previous year. This is the highest record since related statistics began being compiled in 2006. The transaction amount reached 13.9867 trillion KRW, with nearly 14 trillion KRW flowing into the officetel market. By region, the metropolitan area accounted for more than 80%, with Seoul at 5.3271 trillion KRW, Gyeonggi at 4.5425 trillion KRW, and Incheon at 1.5206 trillion KRW.

The subscription competition rate was 26.3 to 1, surpassing apartments for the first time, which had a rate of 19.3 to 1. In fact, in November last year, the 'Hillstate Gwacheon Cheongsa Station' officetel in Gwacheon, Gyeonggi Province, attracted 120,000 applicants with a competition rate of 1398 to 1, and the 'Singil AK Prugio' in Yeongdeungpo-gu, Seoul, also reached a competition rate of 1312 to 1.

However, concerns are growing that the housing market has entered a downturn due to recent real estate regulations and interest rate hikes, and the overheated officetel market also seems to be affected. In particular, since the government decided to apply a DSR (Debt Service Ratio) of 40% to non-residential mortgage loans such as officetels and mixed-use complexes starting January this year, the officetel fever appears to be cooling rapidly. Until the end of last year, officetels were classified as non-residential and were not subject to housing mortgage loan regulations, allowing loans up to 70% of the sale price. Additionally, the government plans to mandate internet subscription through the Korea Real Estate Board's 'Cheongyak Home' for officetels or residential lodging facilities with 50 or more units in regulated areas.

Experts advise that 'separating the wheat from the chaff' is essential even in the officetel market. Ham Young-jin, head of the Zigbang Big Data Lab, said, "When purchasing officetels, it is important to have a clear purpose, but since the boom can end at any time, caution is necessary," adding, "Investors should make decisions in a way that favors future resale by considering factors such as large complex size, mixed apartment units, and complex brand."

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