‘Apartment Alternatives’ Officetels Also Lose Momentum... Polarization by Area Intensifies

Seoul Records 8.9% Change Rate in February
Incheon Falls by 0.15%... Average Sale Price Slightly Decreases
Popular Large Units Rise... Smaller Units Show Decline

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

[Asia Economy Reporter Ryu Taemin] The rising trend in the officetel market, which had been spotlighted as an alternative to apartments, is slowing down. Following a decrease in the rate of price increases in major areas such as Seoul, a downward trend continues in Incheon. In particular, the decline is becoming more pronounced in small-sized officetels with limited floor space.

According to the "Monthly Real Estate Market Review" released by KB Management Research Institute on the 17th, the Seoul officetel price index change rate last month was 8.9% compared to the same month last year. This figure is 0.4 percentage points lower than the 9.3% increase recorded in January. The nationwide officetel price index change rate also decreased by 1.1 percentage points from 12.4% in the previous month to 11.3% last month.

This trend is also reflected in statistics from other institutions. According to the Korea Real Estate Board's monthly officetel trend data, the Seoul officetel price increase rate last month was 0.03%, down from 0.11% in the previous month. In Incheon, prices fell by 0.15% last month, widening the decline since January (-0.04%). The average officetel sale price in Incheon also slightly decreased from 157.98 million KRW in January to 157.79 million KRW last month.

Officetels saw a surge in demand last year due to the balloon effect of apartment regulations. They gained attention for having an interior structure similar to apartments, being less expensive, and being relatively free from various housing regulations. According to the Ministry of Land, Infrastructure and Transport's actual transaction price statistics, the total number of officetel sales nationwide last year was 60,385, a 23.78% increase from 48,768 in 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 Seoul 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 polarization by floor area is also clearly evident. For small officetels under 40㎡ and those between 40㎡ and 60㎡, the nationwide price change rates last month were 0.03% and -0.05%, respectively, while the price for units over 85㎡, popular as apartment substitutes, rose by 0.20%. In particular, in Incheon, prices for units under 40㎡ fell by 0.24%, and those between 40㎡ and 60㎡ fell by 0.21%, whereas units over 85㎡ increased by 0.32%.

Song Seunghyun, CEO of Urban and Economic Research, explained, "Small officetels with limited floor space are less preferred because they are difficult to substitute for apartments. Additionally, with rising loan interest rates reducing rental profitability, their popularity is rapidly declining."

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