With high-intensity regulations expected to continue in the housing market this year, commercial properties, which are relatively free from such regulations, are gaining popularity. In particular, commercial facilities within residential complexes located in densely populated residential areas attract more interest from buyers due to the potential demand from the surrounding population.
A representative example is the commercial facility "Hills Avenue Gamsam Central," currently being sold by Hyundai Engineering in a prime location in Dalseo-gu, Daegu Metropolitan City. This commercial facility is part of the residential complex Hills State Gamsam Central, which consists of three buildings ranging from 5 basement floors to a maximum of 45 floors above ground. The commercial space is located on the 1st and 2nd floors, with 37 units on the 1st floor and 49 units on the 2nd floor, totaling 86 units.
Hills State Gamsam Central has already proven its location and product value, with its residential officetels fully sold out within three days of contract and its apartments achieving a highest competition rate of 60 to 1 in the first priority subscription (84㎡A type). The Hills Avenue Gamsam Central commercial facility benefits from a hinterland demand of 512 households, including 393 apartment units and 119 officetel units, as well as approximately 7,300 residential units being developed in the Jukjeon Intersection area.
As a commercial facility, it is relatively free from regulations compared to apartments or officetels. Anyone aged 19 or older residing in South Korea can apply regardless of whether they have a subscription savings account, residency restrictions, or home ownership status. When taking out a loan, a loan-to-value ratio (LTV) of up to 70% can be applied, and the official land price reflects a lower market value compared to apartments, resulting in lower property taxes per unit area.
Especially with new regulations on taxes and residency obligations being applied to the housing market starting this year, the commercial property market is expected to gain indirect benefits. For example, according to Real Estate 114 data, capital gains tax and comprehensive real estate tax will increase from January. Until last year, a single household owning one home was considered as owning one house when transferring a pre-sale right, and capital gains tax exemption was determined accordingly. However, from January 1 this year, newly acquired pre-sale rights are included in the number of houses owned. A temporary two-house capital gains tax exemption will apply if a single household acquires a pre-sale right for moving purposes.
From June, the capital gains tax surcharge rate for multi-homeowners selling houses will increase from "basic rate + 10~20%p" to "basic rate + 20~30%p." For houses held less than two years and cooperative member move-in rights sold, the tax rate will increase from the current 40% to up to 70%. The surcharge rate applies to transfers made after June 1. The comprehensive real estate tax will also increase up to 6% starting January. For owners of two or fewer houses, the tax rate ranges from 0.6% to 3.00% depending on the taxable standard bracket, while owners of three or more houses and two houses in regulated areas will be taxed at rates from 1.2% to 6.0%.
An industry insider said, "Since most major regions nationwide, not just the metropolitan area, have been designated as regulated areas and the intensity of regulations continues to strengthen, commercial facilities that avoid these regulations are gaining attention as the mainstream income-generating real estate." They added, "With these housing market regulations expected to continue this year, targeting commercial facilities with excellent locations could be a good strategy."
© The Asia Business Daily(www.asiae.co.kr). All rights reserved.
