Corporate Apartment Transaction Volume Revived... Clear Increase in Non-Regulated Areas

Participation in Purchasing Apartments with Official Prices Below 100 Million Won

The volume of apartment transactions by corporations, which had somewhat contracted due to the heavy real estate taxes targeting corporations and multi-homeowners, is reviving. This increase is particularly noticeable in non-regulated areas where many properties have a publicly announced price below 100 million KRW.

According to the apartment sales transaction status by trading entity from the Korea Real Estate Board on the 14th, in May, corporations purchased 1,598 apartments from individuals, accounting for 2.6% of the total transactions (61,666). Compared to the transaction volume of 734 (1.14%) in January earlier this year, the share has more than doubled.

The corporate apartment buying trend peaked in June last year and then turned downward. This was due to the 6·17 regulations, which reduced incentives for corporations to buy real estate by, among other measures, not applying the basic deduction amount (600 million KRW) when imposing comprehensive real estate tax on corporate-owned properties. As a result, corporate transactions with individuals shrank from around 6,900 in June to about 200 in December. However, maintaining triple-digit transactions lasted only three months. Since March, the transaction volume has jumped back into four digits and is gradually rising.

The increase in transaction volume is particularly prominent in non-regulated areas. In Gyeonggi-do, transactions rose from 100 in April to 126 in May. In Chungnam, the number increased from 92 to 120, in Gangwon from 74 to 86, and in Gyeongnam from 92 to 166. These are representative regions where a buying frenzy for apartments priced below 100 million KRW has occurred. Conversely, in Seoul, transactions decreased from 60 to 31 during the same period.

In non-regulated areas, apartments priced below 100 million KRW purchased by multi-homeowners are exempt from acquisition tax and capital gains tax surcharges. Analysts interpret that corporate demand is concentrating on exploiting this gap. Furthermore, expectations that apartment prices will continue to rise in the second half of the year remain strong, suggesting the possibility of further increases in corporate buying activity.