Short-term funds surpass 1,300 trillion won... Investors turning attention to commercial facilities

As economic uncertainty has increased due to the impact of COVID-19 and the low interest rate trend has prolonged, the amount of funds unable to find investment destinations has surged. Industry experts expect income-generating real estate such as commercial facilities to benefit from this.

According to the Bank of Korea and others, as of the end of October last year, the scale of short-term idle funds was about 1,369 trillion won. It increased by nearly 300 trillion won in one year, surpassing 1,300 trillion won for the first time in history. This is interpreted as many economic agents preferring to secure cash-equivalent assets that can be used anytime rather than tying up funds in bank deposits amid the ultra-low interest rate trend.

Commercial facilities can be applied for by anyone aged 19 or older residing in the Republic of Korea, regardless of whether they have a subscription savings account, residence restrictions, or home ownership. When taking out a loan, the Loan-to-Value ratio (LTV) can be applied up to a maximum of 70%, and compared to apartments, the official land price reflects a lower market price rate, resulting in relatively lower property tax per unit area.

Amid this, Hyundai Engineering’s ‘Hills Avenue Gamsam Central,’ currently being sold in Dalseo-gu, Daegu Metropolitan City, is attracting attention. The previously launched Hills State Gamsam Central apartments and officetels both recorded full sales, which is seen as verification of the location and product quality.

Hills State Gamsam Central consists of two apartment buildings from basement level 5 to a maximum of 45 floors above ground, with 393 households ranging from 84 to 175㎡ in exclusive area, one officetel building with 119 units of 84㎡ exclusive area, and the on-site commercial facility ‘Hills Avenue Gamsam Central.’ The commercial facility will be located on the 1st and 2nd floors above ground, with 37 units on the 1st floor and 49 units on the 2nd floor, totaling 86 units.

Hills Avenue Gamsam Central serves the residential demand of 512 households from Hills State Gamsam Central apartments and officetels, and the area around Jukjeon Station, where the commercial facility is located, has established itself as a station-area residential town in Dalseo-gu with about 7,300 households concentrated. In addition, a large-scale commercial district is expected to be formed along with the nearby mixed-use complexes under development, and with the station-area location of Jukjeon Station, strong transportation conditions are expected to generate substantial demand.

Furthermore, as it is developed as a street-level shopping mall along a main road, visibility and accessibility are high, and it is easy for residents of surrounding complexes to access. Especially, being developed as a ‘Hills State’ brand shopping mall, brand power can also be expected.

An industry insider said, “As regulations focused on the housing market have led to a contraction in transactions, idle funds are expected to move to alternative products,” adding, “With the prolonged low interest rate trend and the expected continued increase in idle funds, it is important to find more stable and efficient investment destinations during times like these.”