Profit-type Real Estate Benefits from Prolonged Pandemic... Siwha MTV Wave M (WAVE M) Attracts Attention

- Rapidly Growing Market Size of Residential Lodging Facilities: From Actual Demand to Investor Interest
- Spotlight on Prime Investment Destinations Benefiting from Spillover Effects

As the prolonged COVID-19 pandemic and the government's stringent regulations on apartments continued last year, economic uncertainty has increased. In response, income-generating real estate such as lifestyle accommodation facilities, which can offer relatively higher returns than interest rates, is gaining attention.

Last year, the Bank of Korea significantly lowered the base interest rate twice?in March (1.25%→0.75%) and May (0.75%→0.5%). Since then, an ultra-low interest rate policy has been maintained for nearly a year. Along with the ultra-low interest rate policy, the liquidity in the market has also increased substantially.

This year, the low interest rate policy is expected to continue to stimulate the economy, leading to record-high levels of funds flowing into the market seeking investment opportunities. Given this situation, more investors are investing in income-generating real estate, which offers stable returns and can avoid regulations. As the government applies stringent real estate regulations mainly to apartments, interest is shifting to income-generating real estate, which is subject to relatively fewer regulations.

Due to proactive investors, the transaction volume of income-generating real estate significantly increased last year. According to data from the Korea Real Estate Board, from January to November last year, the total number of commercial and office real estate transactions nationwide was 272,004, about 9.8% higher than the same period the previous year (247,731 transactions). The increase in transaction volume is attributed to the expectation of higher returns compared to savings deposits, based on steady rental income. In particular, income-generating real estate such as lifestyle accommodation facilities located in major tourist destinations, which can directly absorb tourism demand, is attracting investors' interest.

A real estate official said, "As in 2021, strong regulations are expected to be imposed on the housing market again this year, leading investors to flock to the income-generating real estate market. Lifestyle accommodation facilities, which not only generate income through lodging services for tourists like hotels but also serve as a second sanctuary for comfortable rest with family, are attracting many investors, especially in areas with high travel and leisure demand."

Meanwhile, ‘Sihwa MTV Wave M (WAVE M)’, which boasts excellent future value in Sihwa MTV (Multi Techno Valley), a marine leisure city under development, is drawing investors' attention as it is scheduled to be supplied soon.

‘Sihwa MTV Wave M’ is planned to be located in Siheung City. Comprising East and West sections, ‘Sihwa MTV WAVE M’ will consist of a total of 446 lifestyle accommodation units (284 units in 3BL, 162 units in 2-1BL) and neighborhood living facilities. The lifestyle accommodation will include long-term stay residences and lodging-type lifestyle accommodations. In particular, the lodging-type lifestyle accommodations will be operated by a dedicated professional management company in a hotel-style manner, making it advantageous for absorbing marine leisure demand in Sihwa MTV, which is being developed as Korea’s premier marine leisure city. This is expected to generate strong interest among investors.

‘Sihwa MTV Wave M’, a lifestyle accommodation facility that combines the advantages of hotels and officetels, is relatively free from regulations. It is exempt from comprehensive real estate tax, is not subject to the one household two houses rule, and has no resale restrictions. Unlike apartments, which are the main targets of real estate regulations, it is governed by the Building Act rather than the Housing Act, so it is free from many regulatory constraints and is expected to benefit directly from the regulatory spillover effects.

In addition to luxurious premium rooms, the facility will feature diverse community amenities such as an infinity pool, fitness center, and kids’ play park, making it a top destination for family tourists. It also offers a waterfront location with ocean views from every floor, raising expectations as a marine tourism landmark representing Korea.

Furthermore, residents and visitors can enjoy the rich marine leisure infrastructure of Turtle Island, the center of Sihwa MTV. Wave Park is located right in front of the complex, and inland marina facilities connecting Sihwa Lake and the West Sea coast are planned, securing a prime position for marine leisure. The commercial facilities being developed alongside will be designed as an oceanfront marina street mall adjacent to the coast.

Meanwhile, the promotional center for Sihwa MTV Wave M is located in Siheung City, Gyeonggi Province, near the project site.