Even Year-Old Tower Palace Officetel Listings Sold... Multi-Family Homeowners Raise Prices by 100 Million Won but Still Refuse to Sell [Real Estate AtoZ]

A Look Inside Officetels and Multi-Family Housing That Escaped Regulation

On the 25th, a panoramic view of Tower Palace Phase 1 in Gangnam-gu, Seoul. The high-rise buildings visible in the center are apartments, and the building on the far right is an officetel. The lower floors, which connect to the underground shopping mall and vehicle entrance, house commercial facilities. Photo by Seo-yoon Choi

As the entire city of Seoul and major areas in Gyeonggi Province have been designated as "Type 3 regulated zones" under the October 15 measures, demand that has sought to bypass these restrictions is now flowing into high-priced officetels and multi-family housing.

According to the real estate brokerage industry on the 27th, only three transactions of Tower Palace Phase 1 officetels in Gangnam-gu-where actual sales prices range from 3 billion to 8 billion won-were recorded last year, but several transactions have taken place since the announcement of the new measures. A real estate agency head near Dogok-dong Tower Palace said on the 25th, "Even an officetel listing that had not sold for about a year was sold immediately after the measures were announced."

In Yeouido as well, transactions have started to pick up for high-priced officetels with two or three rooms. An agent at a real estate office near Daewoo Trump World commented, "Officetels used to see little trading because of low investment appeal, but recently, transactions have started to occur little by little. Judging by the increasing inquiries, I expect the number of transactions to rise for the time being."

Seoul Gwangjin-gu Gwangjang Hyundai Hometown 11th Complex. Photo by Seo-yoon Choi

Although Gwangjang Hyundai Hometown 11th Complex in Gwangjin-gu is located in a land transaction permit zone, it has managed to avoid direct regulation, and the asking price for its multi-family housing units has risen by 100 million won in just one week. A broker in Gwangjang-dong reported, "The homeowner initially listed the property for 2.45 billion won, but raised the price after the announcement of the new measures."

The homeowner, who recently turned down an offer of 2.5 billion won, stated that they would only consider selling if the offer went even higher, even after being offered 2.55 billion won. The broker explained, "All the surrounding areas are now subject to regulation, but this complex alone has survived. Its scarcity is now a premium. From the homeowner's perspective, there is no longer any reason to rush a sale."

As homeowners begin to hold back listings, the market expects housing prices to start rising in earnest as early as a month from now. A real estate agency head in Goduk-dong, Gangdong-gu said, "During the Moon Jae-in administration, we saw a pattern where prices would remain quiet for a short period after each set of measures, only to rise suddenly. Some homeowners are already raising their asking prices as a result of this learned behavior."

The outlook is based on macroeconomic trends of limited supply and increased liquidity, as well as the lack of effective supply-side measures. A broker in Dogok-dong questioned, "The rise in housing prices is due to interest rate cuts and inflation. Is simply imposing more regulations really the answer?"

On the 25th, real estate listings were posted in front of a real estate agency near Tower Palace in Gangnam-gu, Seoul. Photo by Choi Seoyoon

There are also doubts about the intent behind the new measures. The head of a real estate agency in Daechi-dong commented, "It seems as if the government is making it harder for ordinary people to buy homes while only increasing tax revenue."

He added, "If multi-homeowners do not list their properties, the number of jeonse (long-term lease) listings will decrease and more properties will convert to monthly rentals. This will result in more rental income being reported and taxed. While Gangnam is less affected by changes in monthly rent due to declining demand for school districts, in other areas, monthly rents will rise, only increasing the burden on ordinary people."