Instead of Apartments, 'Officetels'... Price Increase Range Expands in Seoul and Metropolitan Area

Prices of Medium to Large Apartments with Perceived Undervaluation Rising
Price Increase Larger in Seoul and Metropolitan Area, Slower in Provinces
Seoul Average Sale Price 260.86 Million KRW... Monthly Rent 780,000 KRW

[Image source=Yonhap News]

In the fourth quarter of last year, the nationwide officetel sale prices rose by 1.03% compared to the previous quarter, showing an expanded rate of increase. This is interpreted as a sharper price rise due to the shift in demand from apartments, which have recently surged in price, to officetels.

According to the officetel price trend survey released by the Korea Real Estate Board on the 17th, the nationwide officetel sale prices in the fourth quarter of last year increased by 1.03%, expanding from the previous quarter's 0.99%. Both the metropolitan area (1.14% → 1.21%) and Seoul (0.74% → 1.04%) saw an increase in the rate of rise, while the provinces (0.34% → 0.33%) experienced a slight decrease in the rate of increase.

The Korea Real Estate Board explained, "Demand continued mainly for medium to large-sized officetels perceived as undervalued compared to apartments, or those located in areas with expectations of improved residential environments due to development projects, leading to price increases compared to the previous quarter."

In Incheon (1.64%), prices rose mainly in Seo-gu, Gyeyang-gu, and Yeonsu-gu, where development expectations are high. In Gyeonggi-do (1.25%), prices increased mainly in Bucheon, Hwaseong, and Yeongtong-gu in Suwon, where expectations for improved transportation conditions are significant. However, in Daegu, where apartment prices are sharply declining, officetel sale prices also dropped by 0.21%.

Nationwide officetel jeonse (long-term lease) prices rose by 0.84%. With the metropolitan area up 0.96% and provinces up 0.38%, the largest increases were seen in Incheon (1.57%), Ulsan (1.04%), Gyeonggi-do (0.91%), and Seoul (0.82%). In Seoul, prices rose mainly in areas with excellent transportation convenience near subway stations or good residential conditions, and Incheon (1.57%) continued its upward trend due to the shift in demand to medium and large-sized officetels.

In Gyeonggi-do, interest remained focused on areas with good location conditions or transportation convenience, but due to the reduced rate of increase in apartment jeonse prices, the rise in officetel jeonse prices also slowed, increasing by 0.91% compared to the previous quarter.

Officetel monthly rent prices nationwide rose by 0.44%, with Gyeonggi-do (0.82%), Incheon (0.45%), and Busan (0.26%) showing the largest increases. In Seoul, monthly rent prices rose by 0.23% compared to the previous quarter due to continued demand inflow driven by a shortage of jeonse supply and rising prices. In Gyeonggi-do, monthly rent demand increased due to the burden of rising officetel jeonse prices, leading to significant increases mainly in Seongnam Bundang and Hwaseong, areas with excellent proximity to workplaces.

The average officetel sale price nationwide was 215.81 million KRW, 230.74 million KRW in the metropolitan area, and 154.08 million KRW in the provinces. By region, Seoul (260.86 million KRW), Gyeonggi-do (220.85 million KRW), and Busan (169.83 million KRW) ranked highest.

The average jeonse price was 171.88 million KRW nationwide, 185.43 million KRW in the metropolitan area, and 115.89 million KRW in the provinces. Seoul had the highest at 206.92 million KRW, followed by Gyeonggi-do (177.66 million KRW) and Incheon (135.52 million KRW).

The average monthly rent price was 673,000 KRW nationwide, 712,000 KRW in the metropolitan area, and 511,000 KRW in the provinces. Seoul (781,000 KRW), Gyeonggi-do (685,000 KRW), Incheon (558,000 KRW), and Busan (535,000 KRW) ranked highest.

The ratio of officetel jeonse prices to sale prices nationwide was 84.50%. Sejong had the highest ratio at 92.58%, followed by Incheon at 86.40% and Gyeonggi-do at 86.38%. The metropolitan area was 85.20%, provinces 81.60%, and Seoul 83.84%.