Apartment Jeonse Crisis Spreads to Officetels... "Beware of Seoul Empty Jeonse"

Average Jeonse Price of Officetels Nationwide per 3.3㎡ in August 14.61 Million KRW
April 13.77 Million KRW, May 14.21 Million KRW, June 14.41 Million KRW, July 14.12 Million KRW

Hanam-si Misaji District Officetel Construction Site (Photo by Sangga Information Research Institute)

[Asia Economy Reporter Onyu Lim] The apartment jeonse (long-term lease) crisis, intensified by the new Housing Lease Protection Act, is spreading to officetels during the autumn moving season.

On the 22nd, according to an analysis of Ministry of Land, Infrastructure and Transport data by the Commercial Information Research Institute, the average jeonse price per 3.3㎡ (exclusive area) of officetels nationwide in August was 14.61 million KRW. After reaching 13.77 million KRW in April, the average jeonse price of officetels continued to rise for three consecutive months: 14.21 million KRW in May and 14.41 million KRW in June, then slightly dipped to 14.12 million KRW in July before rising again.

While the officetel jeonse prices nationwide increased in August compared to July, the rise was steeper in major cities such as the Seoul metropolitan area and other metropolitan cities.

Among the Seoul metropolitan area and metropolitan cities, Daegu saw the largest increase in jeonse prices from July to August. The average jeonse price per 3.3㎡ of officetels in Daegu in August was 12.96 million KRW, up 1.73 million KRW from 11.23 million KRW in July. This was followed by Gwangju (up 840,000 KRW), Gyeonggi (up 700,000 KRW), Busan (up 540,000 KRW), Ulsan (up 380,000 KRW), and Seoul (up 280,000 KRW).

The regions where the average jeonse price per 3.3㎡ declined were Daejeon (down 300,000 KRW) and Incheon (down 20,000 KRW).

Researcher Hyuntaek Cho of the Commercial Information Research Institute explained, "Due to the recent amendment of the Housing Lease Protection Act causing a shortage of housing jeonse, the demand for officetel jeonse has also significantly increased. Although demand is high, the shortage of jeonse listings is driving up officetel jeonse prices."

In some areas of Seoul, a reverse jeonse phenomenon is occurring where officetel jeonse prices are traded higher than sale prices. Researcher Cho expressed concern, saying, "This phenomenon poses a social risk as it may lead to ‘empty jeonse’ cases where tenants cannot recover their jeonse deposits after the contract period ends."