As investments in officetels, which are outside loan regulations and owner-occupancy requirements, have increased, prices for large units have risen sharply.
According to Korea Real Estate Board (KREB) statistics on the 23rd, the officetel sales price index for units over 85㎡ of exclusive area in Seoul last month rose 0.44% from the previous month. It was the highest growth rate since January of last year, when the board expanded its sample and redesigned the index.
Compared with the same month, units of 40㎡ or smaller rose 0.06%, those over 40㎡ to 60㎡ or smaller rose 0.09%, and those over 60㎡ to 85㎡ or smaller rose 0.20%, making the increase for large units stand out.
The sales price for units over 85㎡ turned upward from -0.05% in March to 0.06% in April and has continued to rise. The increase widened to 0.41% in Aug., narrowed to 0.17% in Sept., then recovered to the 0.4% range in Oct.
By Seoul region, units over 85㎡ in the southwestern area rose 0.54%, the largest increase, while the central urban area rose 0.40%, the northeastern area 0.37%, and the southeastern area, which includes the three Gangnam districts, rose 0.24%.
On Oct. 31, a 137㎡ unit on the 31st floor of Hyundai Hyperion in Mok-dong, Yangcheon District, changed hands for 2.97 billion won, and earlier on Oct. 15, a 128㎡ unit on the 13th floor of Tower Palace Phase 3 in Dogok-dong, Gangnam District, was contracted for 3.2 billion won, with record-high prices following one after another. This month as well, high-priced transactions have continued, including a 187㎡ seventh-floor listing in Tower Palace Phase 3 that sold for 5.45 billion won on the 2nd.
Monthly private statistics from KB Real Estate also show that prices for large officetels rose for 13 consecutive months through last month, and compared with the same month a year earlier, they were the only size category to increase, showing strength.
With the Oct. 15 measures designating all of Seoul as a regulated area (adjustment target areas and speculative overheating districts) and a land transaction permit zone, the loan-to-value ratio (LTV) when purchasing dwellings in Seoul fell from 70% to 40%. However, officetels are classified as non-dwellings, so the 70% level remains in place, leaving them exempt from various loan regulations.
Even if one owns an officetel, it is excluded from the dwelling count, which is favorable for apartment subscription applicants, and it is not subject to owner-occupancy requirements under the land transaction permit zone, so gap investment (buying dwellings with a jeonse tenant in place) is still possible.
Jikbang Big Data Lab head Kim Eun-seon said, "As buying dwellings has become more difficult recently in terms of taxes and loans, there appears to be demand choosing officetels as a second-best residential option."