Officetel Sale Volume Plummets... Half of the Seoul Metropolitan Area Faces Subscription Shortfall

[Asia Economy Reporter Kim Hyemin] As the real estate market contracts, the supply of officetel units for sale has sharply declined this year. Market stagnation deepened in the second half of the year, with nearly half of the units in the Seoul metropolitan area remaining unsold.

On the 21st, Real Estate R114 analyzed the officetel market and found that the supply of officetel units from January to November this year totaled 26,551 units. This is about half the amount compared to last year (56,724 units).

Accordingly, the number of move-in units is also expected to sharply decrease from a peak of 108,335 units in 2019 to 27,103 units in 2024.

The average subscription competition rate for officetels in the Seoul metropolitan area in the second half of this year was about 1.19 to 1, barely avoiding undersubscription. However, according to the Korea Real Estate Board’s subscription homepage, a total of 35 officetel sites in the metropolitan area launched subscriptions in the second half of this year, and nearly half of them?17 sites?were undersubscribed. Considering that only 10-20% of sites were undersubscribed in the same period last year in the metropolitan area, the market sentiment has changed significantly within a year.

Officetel sale prices have steadily risen. The average price per 3.3㎡ (based on contract area) nationwide was 10.98 million KRW as of November this year. This reflects construction companies supplying officetels as alternatives to meet demand for new apartments, mainly near major subway stations. Rising material costs and labor expenses have also been factored in. Since November last year, regulations on floor heating area were relaxed up to 120㎡ of exclusive area, and the price ceiling system was avoided, leading to the introduction of high-end brands in downtown Seoul, which also pushed sale prices higher.

Officetel rental yields have turned upward for the first time in 15 years since 2007. Currently at about 4.52% annually, Real Estate R114 forecasts a gradual increase to above 5%. However, considering high loan interest rates and deposit interest rates, profitability relative to investment is evaluated to be lower than in the past.

Yoon Jihae, Chief Researcher at Real Estate R114, said, "Recently, the officetel market, like the housing market, has solidified trends such as selective subscriptions and bargain sales below market prices. It is necessary to approach the officetel market with a more conservative perspective than before."

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