Additional Designation of Regulated Areas and Strengthened LTV... Balloon Effect Expected in Income-Generating Real Estate Due to Tighter Regulations
Increase in Investment Inquiries for High-Value Lifestyle Accommodation Facilities like 'Chungmuro Haneul'en'
On the 20th, the government announced additional measures to designate some metropolitan areas such as Suwon and Yongin as regulated areas due to the balloon effect spreading in these regions, while also strengthening loan regulations applied to all currently regulated areas.
Accordingly, the Loan-to-Value (LTV) ratio in regulated areas is expected to be further restricted from the current 60% to a maximum of 30%, increasing the financial burden for securing funds.
As a result, real estate investors anticipate that income-generating real estate will benefit from the balloon effect due to the strengthened LTV regulations. The biggest advantage is that these properties are relatively free from regulations and can generate monthly rental income like a salary.
Among income-generating real estate, the most eye-catching recently is the lifestyle accommodation facility. Unlike officetels or urban lifestyle housing, which are limited to actual residence or residential rental business, lifestyle accommodation facilities allow lodging businesses, making them highly versatile. They are subject to the Building Act rather than the Housing Act, so no subscription savings account is required, they do not fall under the one household two houses rule, thus exempt from multi-homeowner regulations, and are not subject to capital gains tax or property tax surcharges. Resale of pre-sale rights is also possible.
Accordingly, it is expected that investors will flock to promising investment destinations, and inquiries about some products are already surging.
A representative example is the lifestyle accommodation facility ‘Chungmuro Haneul-en’ currently being sold in Jung-gu, Seoul. ‘Chungmuro Haneul-en’ is a complex facility consisting of lifestyle accommodation and neighborhood living facilities with 260 units ranging from 21㎡ to 55㎡, spanning from 4 basement floors to a maximum of 15 floors above ground.
Located within the Four Great Gates of Seoul, Chungmuro Haneul-en enjoys abundant demand in its vicinity and offers an excellent residential environment with concentrated infrastructure such as transportation, convenience facilities, leisure and cultural facilities, and educational institutions, making it advantageous for attracting tenants and guests, and is evaluated as having no vacancy concerns.
It boasts a quadruple station area within walking distance, with Chungmuro Station (Lines 3 and 4) and Euljiro 4-ga Station (Lines 2 and 5) nearby. In addition, various living facilities such as cinemas, large marts, department stores, hospitals, and the Jung-gu Office, a government office, are located close by. Nearby are Namsan, Cheonggyecheon walking trail, and Bukhansan fortress course, allowing residents to enjoy a pleasant environment even in the city center.
The abundant demand base is also notable. The complex is located near government offices and companies within the Four Great Gates area, accommodating about 700,000 office workers, and is situated at the center of Seoul’s Central Business District (CBD) connecting Euljiro, Chungmuro, Myeongdong, and Jongno, securing demand from these areas as well. Furthermore, it can attract foreign tourists from the Myeongdong to Dongdaemun tourist special zones, promising high operational profits when used for lodging business.
The differentiated design, unseen in other lifestyle accommodation facilities, allows for apartment-like living, increasing investment value. Individual units feature sliding doors (in some units) that can separate spaces according to use, maintaining an efficient and comfortable living environment, and maximize space utilization through variable spaces such as large pantries and dressing rooms.
Some small units even provide built-in bathtubs for a premium lifestyle. Additionally, the well ceiling design maximizes openness. Urban terraces (in some units) that can be used as outdoor machine rooms, gardens, and relaxation spaces will also be installed.
Specialized hotel-style services such as in-unit cleaning and laundry services and an information lobby operation enhance living convenience, and various community facilities including rooftop gardens, sunken gardens, rooftop gardens, book cafes, and public open spaces are provided.
Advanced systems are also applied. High-efficiency LED lighting, entrance-wide off switches, rainwater reuse for outdoor landscaping and toilets through a middle water tank installation, enhanced insulation materials for eco-friendly building certification, solar power facilities, and fuel cell installations enable energy and management cost savings.
There are many benefits to increase investment stability and profitability. Currently, Chungmuro Haneul-en offers a limited-time New Year event called the ‘Contract Deposit Income Guarantee System,’ which provides income as soon as the contract deposit is paid. This is an interest support of 2 million KRW fixed amount on 10% of the contract deposit for some units of types C, D, and F. This allows for quick income generation and reduces the financial burden of the contract deposit.
Additional support is provided to maximize operational profits for investors considering lodging business operations. Chungmuro Haneul-en recently signed a consignment agreement with a professional management company to specialize lodging facility operation and management and improve profitability.
This is expected to facilitate the use of shared lodging businesses such as Airbnb, which are popular among tourists recently, while reducing the burden and inconvenience of direct operation by purchasers and enhancing investment stability.
Meanwhile, the Chungmuro Haneul-en promotional center is located near Exit 3 of Apgujeong Station on Subway Line 3, where detailed consultations are available upon visit.
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