As apartment prices in Seoul show signs of recovery, the officetel market in the city is also experiencing a rebound. While national officetel sale prices remain weak, Seoul has demonstrated a distinct upward trend since the second half of last year.
According to the Korea Real Estate Agency on June 15, the officetel sale price index in Seoul reached 100.42 in April, up 0.68 points from 99.74 in July of last year. In contrast, the national officetel sale price index fell from 97.45 to 96.39 during the same period, and the metropolitan area index dropped from 97.91 to 97.13.
The Seoul officetel sale price index has maintained a steady increase since recovering above 100 in November of last year. This year, it has consistently remained above 100, recording 100.21 in January, 100.28 in February, 100.34 in March, and 100.42 in April. The rebound in apartment prices has likely shifted some demand toward officetels, which have a lower entry barrier.
The rise in prices is particularly notable for mid to large-sized officetels. The sale price index for officetels larger than 85㎡ increased from 100.89 in July of last year to 104.44 in April of this year, a rise of 3.55 points. Similarly, the index for officetels between 60㎡ and 85㎡ rose from 100.09 to 101.64. The recovery in prices is more pronounced in this size category, which serves as a stronger alternative to apartments compared to smaller units.
There are also signs of increasing rental burdens. The ratio of jeonse prices to sale prices for Seoul officetels rose from 84.32% in January and February to 84.35% in March and 84.37% in April. The median ratio also increased from 85.85% in February to 85.98% in March and 86.06% in April.
The jeonse ratio indicates the proportion of rental prices relative to sale prices. If the jeonse ratio continues to rise alongside increasing sale prices, tenants may feel a greater rental burden. With high apartment rental prices persisting in Seoul, an increase in demand for officetel rentals could lead to heightened rental pressures in some areas.
However, it is premature to conclude that the entire officetel market has entered a full-fledged recovery phase. Outside of Seoul, both national and metropolitan officetel sale price indices continue to decline, and factors such as high interest rates, loan burdens, and regional supply levels remain variables.
Industry experts believe that the interplay between rising apartment prices and rental burdens may lead to a recovery in the officetel market, particularly in size categories that serve as residential alternatives.
A real estate agent noted, "There is a trend of actual buyers feeling pressured by rising apartment prices, prompting them to seek either apartments in the metropolitan area or officetels in Seoul that are relatively more affordable. Especially, mid to large-sized officetels, which attract actual residents, are recovering in price faster than smaller units."
* This article has been translated by AI.
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