Recently, with the possibility of the base interest rate being frozen or lowered within the year being raised, attention is also focused on the impact this may have on the real estate market.
The U.S. central bank, the Federal Reserve (Fed), raised the base interest rate by 0.25 percentage points (p) on the 1st (local time). This is because the Fed, which raised rates at an unprecedented rapid pace throughout last year, is now adjusting the pace to a more typical rate hike size.
Following this adjustment in the pace of rate hikes by the U.S. Fed, experts are placing more weight on the possibility that the Bank of Korea will freeze the base interest rate at the Monetary Policy Committee meeting scheduled for the 23rd of this month. It is predicted that tightening the reins further will be difficult due to growing concerns about an economic recession. Some even predict that if this trend continues, a rate cut could be expected within the year, especially in the second half.
Typically, a rate cut is considered a positive factor that increases liquidity in the market and drives up real estate prices. In addition, the government is also making every effort to ensure a soft landing for the real estate market. Not only the Ministry of Land, Infrastructure and Transport's housing policies but also financial authorities are working to stimulate the housing market by easing real estate loan regulations.
In response to these various positive signals, the market is also showing signs of recovery. According to the Ministry of Land, Infrastructure and Transport's Real Transaction Price Disclosure System, the number of apartment sales transactions in Seoul increased from a low of 560 in October last year to 733 in November and 838 in December. The number of sales reported in January was also 804, and considering that the reporting deadline for transactions is up to 30 days from the contract date, it is expected to surpass December's transaction volume.
Along with this, expectations for tax benefits for private registered rental business operators, which are expected to be implemented or revised this year, are increasing investment interest in officetels in key areas of Seoul, including the Gangnam area. Particularly noteworthy are the high-end, luxury residential products in Gangnam, where development benefits continue.
Compared to other areas, there is a particular shortage of supply relative to demand, and many products consist of floor plans that meet the tax benefits for private registered rental business operators, making them popular. Among these, ‘Eluke Seocho,’ located at the Gyodae Intersection in Seocho-gu, successfully closed its first round of sales in October last year and then sold out the remaining second round stock, excluding company-held units, in December. Inquiries continue, and some royal floor units from the company-held stock will be specially supplied this month.
‘Eluke Seocho’ consists of two buildings from basement level 4 to ground level 23, with a total of 330 units in 12 different floor plans ranging from 19㎡ to 41㎡, including 1-room, 1.5-room, and 2-room types. It is gaining attention as a ‘reasonable high-end’ product offering various high-quality customized concierge services, secretary services, and community facilities.
High-end construction expert Lotte Construction is participating in the construction of ‘Eluke Seocho’ and is responsible for its completion. It is the only project in the vicinity, either sold or planned last year, constructed by a first-tier construction company, which is expected to build heritage as a high-end brand, as well as provide high construction reliability, stability, and future value appreciation.
In particular, it is located at the center of major large-scale development benefits in the Seocho-Gangnam area, such as the ongoing or visible construction plans for complex office facilities on the Lotte Chilsung site and Kolon site, the planned undergrounding of the Gyeongbu Expressway, and the planned development of the Information Service site, which is expected to bring direct benefits.
It enjoys excellent infrastructure in Gangnam, including Seocho Administrative Town, the area around the Express Bus Terminal, Gangnam Station area, and the Seoul Arts Center, with outstanding transportation networks. It is a ‘triple station area’ complex located about 500 meters (approximately a 5-minute walk) from Gyodae Station and Nambu Bus Terminal Station, and about 800 meters (approximately a 10-minute walk) from Seocho Station. It is also adjacent to transportation networks such as Seocho IC on the Gyeongbu Expressway, Banpo-daero, Seoripul Tunnel, and Nambu Sunhwan-ro, providing excellent accessibility by car.
Meanwhile, ‘Eluke Seocho’ is currently operating a model house and is receiving advance intention letters for special supply of company-held units through phone and on-site consultations.
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