The shortage of jeonse (long-term lease) properties is extending from the apartment market to officetels. Since the new lease law was enacted, the number of listings on the market has decreased, causing a supply shortage relative to demand, which has driven up jeonse prices and increased the financial burden on tenants. Especially in the metropolitan area, as it becomes harder to find jeonse listings, many tenants are turning to buying properties or applying for new housing subscriptions. As a result, newly launched officetels are gaining attention.
In fact, since the new lease law took effect in July, the officetel jeonse price index has been steadily rising. According to data from the Korea Real Estate Board, the jeonse price index for officetels in Seoul has continuously increased without any decline from July last year through February this year. The rate of change is also growing. In July last year, the rate was 0.3, and in September 0.16, but it rose to 0.25 in January this year and 0.21 in February, indicating a larger increase in the jeonse price index.
The same trend is seen in Incheon. The officetel jeonse price index in Incheon rose from 99.97 in July last year to 100.17 in October last year, 100.9 in January this year, and 101.12 in February this year, showing a continuous upward trend. The jeonse price index has steadily increased from August last year through February this year.
Individual officetels also show rising jeonse prices. According to the Ministry of Land, Infrastructure and Transport’s actual transaction data, an 84㎡ unit at ‘Hillstate Songdo The Terrace’ in Songdo-dong, Yeonsu-gu, Incheon (occupied since October 2020) was leased for 300 million KRW (8th floor) in February this year. This is 50 million KRW higher than a similar unit on the same floor and size leased for 250 million KRW in the same month.
In Iui-dong, Yeongtong-gu, Suwon-si, Gyeonggi-do, a 31㎡ unit at ‘Gwanggyo Desiang Lube’ (occupied since December 2012) was leased for 168 million KRW in February this year, and a similar unit was leased for 190 million KRW in March, a 22 million KRW increase.
An industry insider said, “With the application of the right to request contract renewal and the rent ceiling system, many existing tenants continue to reside, making it difficult to find jeonse or monthly rental listings. Even when listings appear, landlords reflect price increases, so the financial burden on tenants is significant.” He added, “Some tenants anticipate this situation to continue and are paying attention to officetel subscriptions, which have lower financial burdens and higher chances of winning for low-score applicants.”
Accordingly, the residential complex ‘City O Ciel Phase 3,’ launched in March by HDC Hyundai Development Company, Hyundai Engineering & Construction, and POSCO Engineering & Construction (developer: DCRE) in Michuhol-gu, Incheon, is attracting attention. This complex consists of 8 buildings (including 2 officetel buildings) ranging from 4 basement floors to 46 floors above ground, with a total of 1,879 units: 902 officetel units sized 27?84㎡ and 977 apartment units sized 75?136㎡.
Incheon, where City O Ciel Phase 3 is located, continues to see rising jeonse price indices and average jeonse prices. According to Real Estate 114, the current average jeonse price per 3.3㎡ for officetels in Incheon is 8.63 million KRW. From January to July last year, the price remained at 8.25 million KRW, but after the announcement of the new lease law in August, it rose to 8.61 million KRW, showing an upward trend.
Another reason City O Ciel Phase 3 officetels are gaining attention is the limited supply of officetels planned in Incheon. According to Real Estate 114 data, the planned officetel supply in Incheon from March to December 2021 is only 3,753 units as of March 2021. City O Ciel Phase 3 officetels account for 24.03% of this total.
City O Ciel Phase 3 officetels offer excellent product features. They provide a variety of layouts from studio types to 1.5-room structures and floor plans that can substitute for small apartments, with spacious storage spaces such as dressing rooms, kitchen pantries, and utility rooms. Additionally, separate amenities from the apartments are provided. On the 3rd floor, there are fitness facilities, GX rooms, male and female shower and changing rooms, multi-purpose rooms, a book caf?, and coin laundry facilities, while seasonal storage is available in the basement for each unit.
Moreover, the complex offers convenient living infrastructure. It is a transit-oriented development within walking distance of Hakik Station on the Suin-Bundang Line (planned), which currently passes through without stopping, providing excellent transportation. The complex also includes a six-theater cinema and commercial facilities, allowing residents to enjoy cultural and commercial conveniences.
A sales official stated, “The popularity of officetels in the real estate market continues to rise, and inquiries about City O Ciel Phase 3 officetels are flooding in.” He added, “The complex is competitive due to its excellent officetel product quality, established infrastructure such as transportation, and abundant future value through urban development, satisfying both actual residence and investment needs.”
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