Housing Regulation Balloon Effect... Last Year's Officetel Sales Volume Hits Record High

[Asia Economy Reporter Kim Min-young] Last year, the total transaction amount of officetels reached an all-time high. This is attributed to investment demand shifting to officetels as the apartment sales market slowed due to interest rate hikes and loan regulations.

On the 21st, Zigbang analyzed nationwide officetel sales transactions from the Ministry of Land, Infrastructure and Transport and found that the total actual transaction amount of officetels last year was 13.6476 trillion KRW, a 28.7% increase from the previous year (10.6028 trillion KRW). This is the highest amount since the Ministry began compiling officetel transaction data. The average price slightly rose from 217.09 million KRW in 2020 to 218.82 million KRW last year, and the total number of transactions reached 62,369, a 27.7% increase compared to the previous year.

In particular, the total transaction amount of officetels in the Seoul metropolitan area increased significantly. Last year, the total transaction amount in the metropolitan area was 11.1526 trillion KRW, a sharp 34.6% increase from the previous year. The number of transactions in the metropolitan area also rose by 36.6% to 46,212 from 33,823 the previous year. However, the average price per transaction decreased to 241.34 million KRW from 244.95 million KRW in 2020.

Officetels have been spotlighted as alternative products because they are subject to fewer regulations than apartments. They are not subject to mortgage loan regulations, allowing a loan-to-value ratio (LTV) of up to 70%.

However, it is uncertain whether the popularity of officetels will continue this year. Large-scale supply has been made over the past five years, and from this year, regulations on non-residential mortgage loans, including officetels, have been strengthened.

A Zigbang official said, "More than 600,000 officetel units have been newly occupied over the past five years from 2017 to 2021, increasing the burden of supply," adding, "With the expected strengthening of the debt service ratio (DSR) regulations and base interest rate hikes starting this year, it remains to be seen whether the popularity of officetels will continue."