The Office-tel Market Smiles Again: Rising Yields and Rent-to-Deposit Conversion Rates

The officetel market, which had been sluggish recently, is showing signs of revival.

According to statistics released by the Korea Real Estate Board, the average yield of officetels nationwide in January was 5.27%, and the monthly rent conversion rate was 6.01%. The officetel yield is the highest since June 2020, and the monthly rent conversion rate is the highest recorded since the Korea Appraisal Board's announcement in January 2018.

Officetels, which gained popularity as an alternative to apartments, had seen market contraction due to interest rate hikes and inclusion in the housing tax law, but recently, rental demand for officetels has increased again, bringing renewed vitality.

In fact, the ‘Hillstate Cheongnyangni The First’ officetel, which recently began occupancy, recorded an unusual achievement with nearly 90% of balance payments completed within about three months of move-in, and over 95% of commercial facility contract holders having completed their balance payments, thanks to various development benefits around Cheongnyangni Station’s station area.

This reflects the excellent location and future value of the Cheongnyangni Station area.

In particular, massive transportation benefits are awaiting at Cheongnyangni Station. In addition to the six lines currently operating at Cheongnyangni Station?Line 1, Suin-Bundang Line, Gyeongui-Jungang Line, Gyeongchun Line, KTX Gangneung Line, and Jungang Line?four new lines are planned: the Metropolitan Area Express Railway (GTX)-B Line (Songdo~Maseok), GTX-C Line (Deokjeong~Suwon), Myeonmok Line (Cheongnyangni~Sinnae-dong), and Gangbuk Transversal Line (Cheongnyangni~Mok-dong). A complex transfer center connecting these lines will also be constructed. In the future, it will become a 'transportation hub' where 10 lines (including planned ones) stop. Cheongnyangni Station is one of only three places in Seoul, along with Seoul Station and Samseong Station, where two GTX lines stop. According to the Ministry of Land, Infrastructure and Transport, Cheongnyangni Station had 150,000 users in 2020, and this number is expected to increase to 300,000 by 2030.

Also, with the recent influx of young people, the commercial district around Cheongnyangni is experiencing changes. Lotte Department Store inside Cheongnyangni Station was remodeled last month, attracting more young visitors. The first floor of Lotte Department Store, consisting of cafes and restaurants, is so crowded that it is difficult to find empty seats, thanks to excellent subway and railway accessibility including Line 1.

Moreover, a new ultra-high-rise skyline is being completed around ‘Hillstate Cheongnyangni The First.’ Since 2019, ultra-high-rise residential-commercial complexes have been supplied on the south side of Cheongnyangni Station: Cheongnyangni Station Harrington Place (40 floors) in January 2023, Cheongnyangni Station Hanyang Sujain Graciel (58 floors) in June, Lotte Castle SKY-L65 (65 floors) in July, and Hillstate Cheongnyangni The First (43 floors) in December. These ultra-high-rise complexes, which attracted tens of thousands of subscription applicants from the start, are showing their magnificent presence and occupancy is progressing rapidly, nearing completion.

Real estate agents around Cheongnyangni Station said, “There are many inquiries from outside areas due to transportation benefits and development plans around Cheongnyangni Station,” adding, “In the case of the recently occupied Hillstate Cheongnyangni The First, the station area location and brand value are high, and the mixed composition of income-generating and residential products is attracting much interest and visits from monthly rent and jeonse (long-term deposit lease) demanders.”

Real estate experts advised, “Places with many benefits like Cheongnyangni Station, due to transportation advantages and development plans, maintain steady popularity even during downturns because their value does not easily decline and demand is abundant,” and added, “When considering future real estate investment and occupancy, it is important to consider various location and development benefit factors.”

[‘Hillstate Cheongnyangni The First’ Exterior View]