Up to 80% Loan on Sale Price
No Resale Restrictions and Tax Benefits
Increasing Individual Demand for Investment
Record High Approvals in Q1
Business Registration Certificate Required
But Incorrect Investment Information Spreads
Accurate Move-in Eligibility Must Be Confirmed
[Asia Economy Reporter Donghyun Choi] Investment in knowledge industry centers is increasing as a ripple effect of housing market regulations. Unlike housing, there are no loan restrictions, and there are even tax benefits, so not only companies but also individual investors for investment purposes are active, according to industry sources. However, as reckless sales through various loopholes increase, cases of damage are also emerging.
According to the industry on the 12th, recently, more ordinary people are investing by sharing information about investment methods related to knowledge industry centers on real estate-related communities. Mr. A said, "I recently sold my house in Seongsu-dong, Seoul, and switched to investing in knowledge industry centers," adding, "I established a corporation under my wife's name and purchased two units in a knowledge industry center in Dongtan." Another investor, Mr. B, said, "One knowledge industry center is promoting contracts on the condition that initial tenants are guaranteed through another company with a separate agreement," adding, "If the property has secured tenants, it commands a high premium upon resale, so I am considering investing."
The recent surge in investment enthusiasm for knowledge industry centers is because it is easy to access investment without a large sum of money. Unlike housing, knowledge industry centers allow loans up to 80% of the total sale price. By utilizing government-supported policy funds, leverage can be increased up to 90% of the sale price. There are no resale restrictions. Occupying companies also receive reductions in property tax (37.5%) and acquisition tax (50%).
Legal policy support that can reduce the burden of approval procedure costs and financial support such as loan mediation are also provided, leading to many startups and small and medium-sized enterprises moving into knowledge industry centers recently. According to the Korea Industrial Complex Corporation, the number of approvals for knowledge industry centers in the first quarter of this year was 51, marking the highest quarterly record ever. The annual number of approvals also shows a noticeable increase: 78 in 2017, 107 in 2018, and 149 in 2019. However, as the supply of units increases, cases of damage due to incorrect investment information are also occurring.
Mr. Jin (77), who signed a sales contract for the A Knowledge Industry Center in Osan City, Gyeonggi Province last month, is currently involved in a legal dispute with the sales agency. Mr. Jin claims that despite the agency not having the necessary documents such as a business registration certificate for the sale, they forced him to take out a loan for the deposit and pressured him into signing the contract. He states that it was a 'voice phishing'-style transaction where the deposit was extorted incompletely and unfairly without proper explanation. On the other hand, a representative of the agency said, "Cancellation of the contract is not possible," and "We will respond legally."
Experts explain that when investing in knowledge industry centers, it is necessary to verify the exact eligibility for occupancy in advance. According to the "Act on the Promotion of Industrial Cluster and Factory Establishment," knowledge industry centers must be recognized as facilities for industries eligible to move in, and it is prohibited to change to industries that are not allowed or to lease to such industries. Since occupancy and leasing are basically impossible without being a business operator, a business registration certificate is essential. Without a business registration certificate, mid-term loan is also impossible. The business registration certificate must be submitted within 20 days after the contract.
However, in reality, many knowledge industry centers in the metropolitan area currently selling units have been encouraging sales by saying that there is no problem even without a business registration certificate. A sales representative of B Knowledge Industry Center said, "Nowadays, business registration certificates can be issued on the same day, so you can pay the deposit first and get it later." When questioned whether it would be problematic if an employee obtains a business registration certificate, they encouraged contracts by saying, "There are ways." A sales representative of C Knowledge Industry Center also said, "If you visit the site directly, I will tell you how to get a loan up to 90%." An industry insider advised, "Since the economic situation is not good and polarization is severe even in knowledge industry centers, investment should be made cautiously."
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