High-Priced Officetels and Urban Lifestyle Housing Face 'Cold Wind'

[Image source=Yonhap News]

[Asia Economy Reporter Cha Wanyong] Until last year, high-priced residential facilities (officetels and urban lifestyle lodging facilities) that gained popularity by avoiding regulations focused on apartments are now being shunned in the market. Directly affected by soaring interest rates and the real estate market downturn, unsold units are rapidly increasing even in popular Seoul areas such as Gangnam, Yongsan, and Mapo.

According to the Seoul Real Estate Information Plaza on the 18th, out of 866 unsold units registered in Seoul as of the end of October, more than 50%, or 435 units, are officetels or urban lifestyle lodging facilities. Considering the potential unsold units of officetels and urban lifestyle lodging facilities currently on sale but not yet past the contract deadline, hundreds more are expected to be added.

The common factor in unsold units of officetels and urban lifestyle lodging facilities is the high sale price. A representative example is the urban lifestyle lodging facility ‘Villiv The Able’ in Nogosan-dong, Mapo-gu, supplied last May. Out of a total of 256 units, 245 remain unsold. The sale price for units with exclusive areas of 38 to 49㎡ reached 780 million to 1.37 billion KRW, leading to a lack of demand.

The urban lifestyle lodging facility in Wonhyo-ro 2-ga, Yongsan-gu (formerly Wonhyo Apartment), which offered a total of 41 units, is entirely unsold. Despite its prime location, the sale price for units with exclusive areas of 26 to 29㎡ was set between 845 million and 895 million KRW, pushing it out of buyers’ interest.

Although some projects succeeded in selling out, cases of contract cancellations are emerging. ‘The Sharp Banpo River Park’ in Banpo-dong, Seocho-gu, Seoul, which attracted attention last year as the highest-priced urban lifestyle lodging facility nationwide, had its move-in period end on September 25, but the current occupancy rate is only about 10%. Due to the sharp rise in interest rates reducing jeonse (long-term lease) demand, buyers who could not find tenants have failed to pay the remaining balance. Contract cancellations continue, and listings priced 200 million KRW below the sale price have appeared. The sale price for units with exclusive areas of 49㎡ ranged from 1.5 billion to 1.8 billion KRW.

The situation is similar for apartments. High sale prices lead to market rejection. Examples include ‘Cantavil Suyu Palace’ (118 units) and ‘Forena Mia’ (65 units) located in Suyu-dong and Mia-dong, Gangbuk-gu, respectively. These complexes, built in Gangbuk-gu where the price ceiling system does not apply, set sale prices around 1.1 billion KRW for units with exclusive areas of 78 to 84㎡, sparking controversy over high prices.