"Prices are low and yields are rising"... Officetels emerge as niche investment destinations

[Financial News] With the government's tightening of loan regulations leading to a contraction in apartment purchase demand, buyers' attention is turning to officetels. While purchase prices are falling, rental yields are rising, making small and medium-sized officetels re-emerge as small-scale income-generating assets.
According to industry sources on the 16th, the Seoul officetel market has recently shown stagnant purchase prices and rising rents. As of the end of June this year, the rental yield of Seoul officetels surveyed by the Korea Real Estate Agency was 4.94%, a slight increase from 4.92% in March. During the same period, purchase prices remained flat (0.00%), while rent prices rose by 0.28%. This trend is also confirmed by private statistics. During the same period, the Seoul officetel yield compiled by Real Estate R114 was 4.21%, recording a flat rate for seven consecutive months since December last year. It shows a stable yield compared to the volatility of the apartment market.
There is also an increase in inquiries from end-users and investors. A representative of a brokerage near Gongdeok Station said, "Officetels near subway stations have always had steady demand for both residential and investment purposes, but inquiries have increased recently," adding, "Most budgets seem to be around 300 million won."
The current average purchase price of Seoul officetels is 276.9 million won, and the monthly rent is 914,000 won. The conversion rate from monthly rent to deposit is 5.87%, higher than the typical fixed deposit interest rate. This is why officetels are attracting attention from buyers looking for alternative investments after the maturity of deposits.
Officetels have lower initial investment costs than apartments and have a rent-focused structure, reducing the burden of leverage (loans). In particular, small and medium-sized officetels concentrated in urban and station areas have consistent demand from one- to two-person households, resulting in low vacancy risks. If certain conditions are met, they can be excluded from the housing count, making them a tax-saving tool.
However, there are concerns that focusing solely on the apparent yield may lead to an optical illusion effect. Officetels have higher acquisition taxes (4.6% for non-residential use) than apartments, and additional costs such as holding taxes, management fees, and vacancy risks are significant. Considering loan interest rates, the actual yield may remain at around 2-3%. The rapid depreciation after completion also limits the potential for asset value appreciation.
Yoon Ji-hae, head of the Real Estate R114 Research Lab, advised, "Officetels are suitable for long-term holding strategies aimed at rental income rather than capital gains," adding, "It is necessary to approach conservatively by comprehensively considering vacancy management, tax burdens, and policy variables."

en1302@fnnews.com Jang In-seo Reporter