Corporations Hesitate as 'Housing Suppliers'... Hampered by Government Regulation Tightening

[Asia Economy Reporter Ryu Tae-min] Corporations, traditionally acting as sellers of housing, appear to be shifting towards the role of buyers recently. Although government measures such as the reduction of benefits for rental business operators and strengthened housing loan regulations for corporations have put brakes on the buying position, strong buying demand is emerging mainly in metropolitan areas.

According to an analysis of corporate housing transactions by real estate information company Zigbang on the 21st, nationwide corporate housing purchases reached 80,151 units in 2020, marking the highest level since records began in 2006. Last year, the total number of housing transactions decreased to 62,241 units, but this figure remains high compared to previous years. On the other hand, corporate housing sales recorded 84,569 units in 2020 and 70,848 units in 2021, indicating that the increasing trend in sales has halted.

The net corporate housing sales (sales minus purchases) increased to 104,792 units in 2011 but then showed a rapid declining trend. In 2019, the net sales reversed to -6,355 units, meaning purchases exceeded sales, but from 2020, sales again outnumbered purchases, increasing to 4,418 units in 2020 and 8,607 units in 2021. However, compared to previous years, net sales have decreased, showing a reduced role of corporations as suppliers of housing in the market.

Examining the characteristics of corporate transactions, apartment purchases were dominant until 2014, but from 2015 to 2019, the proportion of non-apartment purchases exceeded that of apartments. In 2020, when transaction volume surged, corporate apartment purchases were 42,848 units, higher than non-apartment purchases at 37,303 units; however, in 2021, non-apartment purchases (33,340 units) again surpassed apartment purchases (28,901 units). Since 2015, corporations have consistently preferred non-apartment properties.

A Zigbang official stated, “The new government’s policy direction shows a trend toward strengthening the role of the private housing rental market and forming a market centered on the private sector,” adding, “The role of corporations and rental business operators is being emphasized, and various policy regulations related to them are likely to be eased.” He further explained, “Although the policy direction may be favorable to the net buying position of corporations, uncertainties are expanding due to concerns about external economic conditions such as interest rate hikes and inflation.”