If You Sign a Commercial Lease, Do You Get an Officetel?..."When Choosing the Right Commercial Investment"

[Image source=Yonhap News]

Although the volume of commercial property transactions is increasing due to the "step-by-step return to daily life (With Corona)," vacancy rates in some areas are actually rising, showing a mixed trend. Amid this, some commercial property sales companies are attempting to bundle sales by leveraging the popularity of officetels, prompting the need for investors to approach cautiously.

According to the Korea Real Estate Board on the 25th, the total number of commercial and office real estate transactions nationwide in the third quarter of this year was 100,412, the highest volume since the first quarter of 2018. This represents a 5.7% increase compared to 95,000 transactions in the previous quarter.

However, vacancy rates and yields have worsened. The average yield for small-scale commercial properties nationwide in the third quarter was 1.38%, down 0.18 percentage points from 1.56% in the previous quarter. In Seoul, the average yield also fell by 0.23 percentage points to 1.53% during the same period.

Commercial property sales are also polarized. While some properties are sold out immediately upon launch, there are cases where officetels are used as bait to sell commercial spaces due to concerns about unsold units. Recently, at an officetel sale in Namyangju-si, Gyeonggi Province, on-site applicants voiced complaints. Mr. A said, "I came to apply for an officetel, but the sales staff said that if I purchase a commercial space, I would also get an officetel, which was shocking."

This is seen as an example reflecting the still uncertain outlook for commercial property investment. Park Daewon, director of the Commercial Property Information Research Institute, said, "Good commercial districts or locations can recover at any time, so entering is acceptable, but the timing cannot be predicted," adding, "It is important to carefully distinguish the good from the bad through thorough analysis."

On the afternoon of the 10th, citizens are crossing the street at a crosswalk in Jongno, Seoul, an area densely populated with workplaces.

There are also concerns that the overall demand area for commercial spaces is decreasing. According to an analysis by the Seoul Institute, affiliated with the Seoul Metropolitan Government, based on offline store retail sales last month, the rate of decrease in demand area for commercial spaces in Seoul expanded from 8.8% in 2014 to 14.8% in 2016. The institute predicts that by 2045, the required area for commercial facilities will shrink to less than half of the current size.