In key areas such as Seoul's Gangnam region, monthly rentals costing several million won are on the rise. A look at contracts for high-end monthly rentals of 3 million won or more showed that in some districts they accounted for more than a quarter of the total. Analysts say this stems from growing demand to live in newly built, high-priced apartments without purchasing dwellings, even among those with funds to buy, in order to avoid various taxes such as acquisition tax and property tax.
According to real estate big data analysis corporations Zigbang and the Ministry of Land, Infrastructure and Transport on the 12th, Seoul recorded 459 monthly rental contracts of 3 million won or more in September. That was 7.3% of all monthly rental contracts (6,246) across Seoul's 25 districts. Contracts for monthly rentals of 3 million won or more have been running at roughly 400 to 700 per month this year.
Most high-end monthly rentals were signed in parts of Seoul such as Gangnam. By district, Gangnam District had the most with 133 contracts. That was 25.04% of all monthly rental contracts (531) in Gangnam last month. In other words, one out of every four contracts was a high-end monthly rental.
Seocho District and Songpa District, which along with Gangnam District are known as the three Gangnam districts, also see many high-end monthly rentals. Seocho District logged 113 contracts last month, and Songpa District had 63. They were followed by Seongdong District (40), Yongsan District (37), and Mapo District (18).
Experts say high-end monthly rentals are increasing, centered on Gangnam, as demand grows to reside in newly built, high-priced dwellings while avoiding various taxes related to dwellings, such as acquisition tax and property tax.
Kim Hyo-seon, chief real estate committee member at NH NongHyup Bank, said, "In the past, jeonse was common, but with a rapid shift to monthly rentals, high-end monthly rents are increasing, centered on newly built apartments in the Gangnam area," adding, "There are many tenants paying monthly rent of 10 million won or more, and they are usually corporate-name tenants or people with strong cash flow such as professionals and entertainers."
Kim In-man, head of the Kim In-man Real Estate Economy Research Institute, said, "If you buy dwellings, you have to pay acquisition tax, property tax, and comprehensive real estate tax, so some judge it is better to live on monthly rent," adding, "Among business operators who run corporations, many also treat monthly rent as an expense." Kim added, "In the past, people viewed monthly rent negatively, but now major foreign cities are even more expensive, and as the perception spreads that you can pay 3 million won or 5 million won in monthly rent, demand is increasing in popular areas along the Han River belt."