"High Interest Rates and Economic Recession..." Nationwide Officetel Transactions Halved

Due to high interest rates and an economic downturn, the number of officetel sales nationwide this year has dropped to half the level of last year.

[Image provided by Real Estate R114]

On the 5th, real estate big data company Real Estate R114 analyzed the actual transaction data from the Ministry of Land, Infrastructure and Transport and found that from January to August this year, the nationwide officetel sales volume was 17,853 cases, which is about half of last year's 33,939 cases.

The officetel transaction volume reached 43,124 cases in 2021, driven by a sharp rise in apartment market prices and regulatory spillover benefits. However, last year, officetels were included in the Debt Service Ratio (DSR) regulation, and with rapidly rising interest rates, the market began to contract. Additionally, the risk of reverse jeonse and jeonse fraud emerging in non-apartment properties such as officetels led to a decrease in tenant demand, reducing investment attractiveness.

In particular, the transaction volume in the Seoul metropolitan area, where officetels are densely concentrated, recorded 11,772 cases this year, more than halving compared to 25,247 cases last year, leading the overall market contraction.

Not only demand but also the construction industry downturn is causing a decrease in officetel supply. As of the 4th, the nationwide officetel pre-sale volume (including planned) this year was counted at 18,404 units, down 8,183 units (30.8%) compared to last year. Considering that pre-sale volumes have significantly decreased since last year and that it takes about 2 to 3 years from pre-sale to move-in, it is analyzed that the officetel move-in volume next year is likely to be around 30,000 units.

Since most officetels are located in urban areas and are excluded from the housing count when applying for apartment subscriptions, serving as a housing ladder for younger generations, Real Estate R114 forecasts that this decrease in volume could lead to a limitation in housing choices.

A representative from Real Estate R114 said, “The government’s ‘Housing Supply Expansion Plan’ announced at the end of last month includes support for construction funds for non-apartment properties that can supply housing in the short term, so supply that had been restrained depending on location or project feasibility may be released. However, without clear demand stimulation measures, it seems difficult to expect immediate effects from supply expansion,” adding, “The officetel market is expected to continue its sluggish trend amid contraction in both supply and demand.”

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