In the first half of this year, the nationwide transaction volume for officetels increased by 14.2% compared to the second half of last year.
Real estate R114 reported that the nationwide officetel sales transaction volume reached 15,823 cases (based on contract dates) in the first half of this year, an increase of 1,977 cases (14.2%) compared to the second half of last year (13,846 cases) on the 11th.
Real estate R114 noted, “In the second half of 2023, the demand for low-cost purchases and actual demand for housing transactions expanded, particularly around major apartments in Seoul and the metropolitan area, leading to a slight increase in apartment prices.” They added, “With the relatively low prices forming in key locations of the metropolitan area, the demand for home ownership and investment interest in officetels, which are strong substitutes for apartments, is increasing.”
The competition rate for officetel applications also increased. The average application competition rate for nationwide complexes in 2023 was about 8 to 1, but it rose to 14.12 to 1 in 2024 (January to October), indicating an expansion in investment interest. Although this figure is significantly lower than the average application competition rate of 63.17 to 1 during the real estate boom in 2021, real estate R114 interpreted that the lowest point has been solidified.
Additionally, the nationwide officetel rental yield in the first half of this year was 4.69%, marking the third consecutive year of increase since the low point of 4.47% in 2021. This increase is attributed to the continued decline in officetel prices and the transfer to monthly rents due to concerns over jeonse deposits.
Amid this situation, the recent slowdown in the construction industry has significantly reduced the new supply market for both apartments and officetels. The nationwide officetel supply volume for 2024 is expected to drop sharply to 16,522 units, which is 29.13% of the 56,704 units in 2021. The volume of units available for occupancy has also steadily decreased, reaching only 32,214 units, which is 41.82% of the 77,018 units in 2021. It is predicted that the occupancy volume will decrease by 3.9% from 32,214 units this year to 30,946 units next year.
A representative from Real estate R114 explained, “The interest from actual buyers looking for alternatives has increased due to continuously rising apartment prices, and investor expectations are rising due to higher rental yields compared to deposits. Therefore, the officetel market is expected to show a prominent recovery next year.”
They added, “However, compared to the real estate market boom from 2019 to 2021, the level of recovery is still low and given the uncertainty factors arising from low growth and polarization, caution is needed in broad interpretations.”