Seoul Apartment Jeonse Shortage, Should You Consider Moving into an Officetel?

40,127 Units Nationwide Scheduled for Second Half
3,885 Units in Seoul This Month Alone
Loan and Tax Regulations Are Relaxed
Gasan Central Prugio and Others Attract Attention

[Asia Economy Reporter Donghyun Choi] Amid rising jeonse prices and a shortage of listings in the Seoul apartment market, attention is focused on whether officetels can absorb this demand.

According to Real Estate 114 on the 3rd, 40,127 officetel units nationwide are scheduled for occupancy in the second half of this year. This is a 16.6% decrease compared to the same period last year (48,146 units), but an 18.3% increase compared to the previous quarter (33,910 units). In particular, 3,885 units, accounting for 9.7% of the total supply in the second half, are scheduled for occupancy in Seoul this month alone.

'Gasan Central Prugio City' in Gasan-dong, Geumcheon-gu, scheduled for occupancy on the 10th, is the largest officetel complex in Seoul for the second half of this year with 1,454 units. Located in the heart of the Gasan-dong business district, which is densely populated with IT companies, it is attracting high interest from demand groups who prioritize proximity to work. The largest 35㎡ (exclusive area) sale rights are currently priced in the low 300 million KRW range. This is about 40 to 50 million KRW higher than the sale price (274.8 million KRW). Jeonse transactions are taking place at around 250 million KRW.

'Noryangjin Dream Square' in Noryangjin-dong, Dongjak-gu, with 598 units, is also welcoming residents this month. It is located in the station area of Noryangjin Station where lines 1 and 9 intersect, opposite the Noryangjin Fish Market. The largest 26㎡ sale rights are priced at 300 million KRW, with a premium of about 30 to 50 million KRW compared to the sale price. A representative from Noryangjin-dong A Real Estate said, "Recently, jeonse inquiries have surged, mostly from newly employed workers or students studying at nearby academies," adding, "High floors offer views of the Han River, so there is strong demand for actual residence."

Supply in the Gangnam 4 districts (Seocho, Gangnam, Songpa, Gangdong) is also concentrated between August and September. This month, 'Seocho Central I-Park (480 units)' in Seocho-dong, Seocho-gu, 'Nonhyeon I-Park (194 units)' in Nonhyeon-dong, Gangnam-gu, and 'Into Park Geoye 1 & 2 Complex (129 units)' in Geoye-dong, Songpa-gu are scheduled for occupancy. In September, occupancy is planned for 'Godeok Station Hyosung Harrington Tower The First (410 units)' in Myeongil-dong, Gangdong-gu, 'Jamsil Jeniar (182 units)' in Bangi-dong, Songpa-gu, and 'Godeok Central Prugio (127 units)' in Godeok-dong, Gangdong-gu.

Officetels are considered advantageous because they are freer from loan and tax regulations compared to apartments. While the loan-to-value ratio (LTV) for Seoul apartments ranges from about 20% to 40% depending on the price, officetels can have up to 70%. There is no obligation to submit a funding plan. Under the June 17 measures, existing jeonse loans are recalled when purchasing a new apartment over 300 million KRW in speculative overheated districts, but this regulation does not apply to officetels. Additionally, officetels are classified as residential and non-residential; non-residential officetels are not subject to acquisition tax surcharges for multi-homeowners under the July 10 measures nor to the recently implemented amendments to the Housing Lease Protection Act (renewal request rights and rent ceiling system).

Research Team Leader Il Kwon of Real Estate Info said, "The spark of overheating in apartments is shifting to officetels," and predicted, "From August, when regulations become full-scale, officetels will properly experience the balloon effect."