26 Million Won, Oh? It's Not a Deposit... Monthly Rent High Kick

This Month in Seoul Alone
3 Contracts in the 20 Million Won Range
Even Tenants Struggling to Save Lump Sum
Prefer Monthly Rent Over Jeonse

[Image source=Yonhap News]

[Asia Economy Reporter Hwang Seoyul] This month, three monthly rent contracts in the 20 million KRW range were concluded in Seoul. The monthly rent prices for properties of the same size in ultra-luxury apartment complexes are hitting record highs. This is the result of the supply and demand of tenants and landlords who prefer monthly rent over Jeonse (a Korean lease deposit system). This trend of Jeonse turning into monthly rent is driving up the monthly rent prices of apartments in Seoul.

According to the Ministry of Land, Infrastructure and Transport's real transaction price disclosure system on the 21st, Galleria Foret in Seongsu-dong 1-ga, Seongdong-gu, Seoul (exclusive area 241.93㎡) was leased with a deposit of 400 million KRW and a monthly rent of 26 million KRW. Since Galleria Foret was completed in 2011, this is the first time that a monthly rent in the 20 million KRW range has been transacted for the same area.

Two monthly rent contracts in the 20 million KRW range were also made at Acro Seoul Forest in Seongsu-dong 1-ga, Seongdong-gu. The exclusive areas of 159.603㎡ and 164.856㎡ were leased with deposits of 1 billion KRW and 500 million KRW, respectively, and monthly rents of 20 million KRW. In January this year, the 159.603㎡ unit in this complex was leased with a deposit of 800 million KRW and a monthly rent of 20 million KRW. When converted to Jeonse price, it means an increase of about 200 million KRW in just three months. Besides the Seongsu-dong complexes, monthly rent prices for ultra-luxury apartments are also on the rise. I-Park in Samseong-dong, Gangnam-gu (156.857㎡) was leased with a deposit of 300 million KRW and a monthly rent of 14 million KRW. Last month, PH129 in Cheongdam-dong, Gangnam-gu (273.96㎡) was leased with a deposit of 400 million KRW and a monthly rent of 40 million KRW, setting an all-time high monthly rent record.

The upward trend in monthly rent is not limited to ultra-luxury apartments. According to the Korea Real Estate Board, the integrated monthly rent price index for apartments in Seoul is 101.9, showing an increasing trend since May 2019. The March KB Apartment Monthly Rent Index, which surveyed medium-sized and smaller apartments, also rose 4.4% year-on-year to 101.2, continuing its upward trend since November 2019.

Experts analyze that the rise in monthly rent prices stems from the overall trend of increasing rental prices. As Jeonse prices rise, the deposit-based monthly rent prices, which are set based on Jeonse, inevitably increase as well. Another reason is that as apartment prices soar, buyers who find it difficult to purchase homes are turning to renting instead. The stronger the trend of Jeonse turning into monthly rent, the more this upward trend in monthly rent prices is expected to accelerate. Professor Park Hapsu, adjunct professor at Konkuk University Graduate School of Real Estate, said, "There is a trend to convert existing Jeonse properties into monthly rent to pass on tax burdens such as comprehensive real estate tax to tenants, and the preference for monthly rent among tenants who lack lump sums also contributes to the rise in monthly rent prices."

Experts also analyze that this market trend will continue for the time being. Professor Baek Seongjun of Hansung University’s Department of Real Estate said, "As sales prices rise, rental demand increases, and since Jeonse itself becomes expensive, more people think it is reasonable to bear higher monthly rent."

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