If Possible, Go Big... The Larger, The Fiercer the Officetel Subscription Competition

Gwanghwamun area officetel dense district. Photo unrelated to content / Source=Yonhap News

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[Asia Economy Reporter Hwang Seoyul] Medium-sized officetels for 3-4 person households are attracting real demand, showing high subscription competition rates. With the new government's reorganization of the private rental business system, expectations for investment demand are also increasing, and popularity is expected to grow further.

According to Korea Real Estate Agency's Subscription Home on the 27th, the resident-priority competition rate for 74~77㎡ (exclusive area) units of 'Yeouido Hyundai Maestro' in Yeouido-dong, Yeongdeungpo-gu, Seoul, which closed subscription on the 25th, recorded 89 to 1. For relatively smaller housing types of 25~27㎡ and 47~51㎡ in the same recruitment group, the rates were 31.71 to 1 and 22.41 to 1, respectively.

Due to the rapid rise in apartment prices, the number of real demand buyers looking for officetels with two or more rooms is increasing. The nationwide apartment sales price index has steadily increased since October 2019. As a result, medium-sized officetels suitable for 3-4 person households have emerged as substitutes. 'Byeongjeom Station Seohae Sky Palace Phase 1' in Byeongjeom-dong, Hwaseong-si, Gyeonggi-do, which closed subscription on the 13th, consists solely of 84㎡ units, known as the national standard size. This also recorded a resident-priority subscription competition rate of 159.78 to 1.

Investment demand seems to be concentrated on larger units because larger sizes yield higher capital returns. According to the Korea Real Estate Agency's 'Nationwide Officetel Sales Price Index by Size,' the larger the area, the greater the increase in the sales price index. Based on June 2020 (100.0), the sales price indices as of last March for exclusive areas under 40㎡, 40㎡ to under 60㎡, 60㎡ to under 85㎡, and over 85㎡ were 100.17, 104.93, 110.46, and 114.91, respectively. This means that assuming the same amount of money is invested, larger areas can gain greater capital gains.

Moreover, as the Presidential Transition Committee is considering excluding residential officetels below a certain area from the comprehensive real estate tax taxable housing count, the popularity of larger units is expected to continue. Ye Kyung-hee, a researcher at Real Estate R114 Research Team, said, "Although there are variations depending on location and transportation conditions, if policies benefiting private rental business operators are positively discussed, preference for officetels with two or more rooms will increase further."

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