Large Officetels in Seoul Rise for 8 Consecutive Months... Regions Mark 38 Months of Decline [Real Estate AtoZ]

Alternative Demand for Apartments Pushes Up Prices of Large Officetels in Gangnam and Yangcheon
Small and Regional Officetels Continue to Decline, with Higher Yields Only in Regional Areas
Five Major Metropolitan Cities Mark 38 Consecutive Months of Decline Since 2022

In September, polarization in the officetel market became even more pronounced depending on unit size and region. In Seoul, prices for large residential officetels (so-called "Apateuls") with layouts similar to apartments continued to rise for the eighth consecutive month, whereas small officetels intended for rental purposes and those in regions outside the Seoul metropolitan area continued to decline.

A real estate agency in downtown Seoul has posted information sheets related to officetel rentals. Yonhap News.

According to the "September KB Officetel Statistics" released by KB Kookmin Bank's KB Real Estate, the nationwide sales price of officetels in September fell by 0.05%, but Seoul saw a 0.13% increase, marking its eighth consecutive month of growth.

The main driver of this upward trend was large officetels with exclusive areas exceeding 85 square meters. In the Seoul metropolitan area, prices for large officetels rose by 0.44%, continuing a 12-month streak of increases. In contrast, prices for extra-small (-0.13%), small (-0.17%), medium (-0.07%), and medium-large (-0.02%) units all declined.

This is analyzed as a result of demand shifting to relatively affordable residential officetels after a sharp rise in Seoul apartment prices. In particular, large officetels in the southeastern region, including Gangnam District (up 0.28%), and the southwestern region, including Yangcheon District and Yeongdeungpo District (up 0.17%), led the overall increase in Seoul.

On the other hand, small officetels intended for rental income remained weak. The central area, including Yongsan District and Seodaemun District (-0.09%), and the northwestern area (-0.06%) saw notable declines in small unit prices, resulting in a downward turn.

Unlike Seoul, other regions failed to escape stagnation. Incheon declined for the fifteenth consecutive month (-0.13%), and Gyeonggi Province for the eleventh consecutive month (-0.16%). The five major metropolitan cities posted a 0.40% drop, marking a staggering 38 consecutive months of decline since July 2022.

However, as sales prices fell, rental yields were actually higher in regional areas. As of September, the rental yield for officetels in Seoul was 4.82%, the lowest in the metropolitan area, while Incheon recorded 6.34% and the five major metropolitan cities posted 6.47%.