Seoul officetel rents near 960,000 won a month; yields hit an all-time high

[Financial News] Monthly rents of 1 million won are becoming a new benchmark in Seoul’s rental market. As the burden of housing costs from rising apartment jeonse prices spills rapidly into the monthly rental market, this momentum is now rippling through the officetel market as well.
On the 5th, data from the Ministry of Land, Infrastructure and Transport’s real estate transaction price disclosure system showed that 71.7% of the 16,901 monthly rental transactions for Seoul apartments with an exclusive area of 84 square meters, concluded from January through October 22 this year, were for at least 1 million won, underscoring the increased housing costs borne by tenants. This upward pressure in the apartment market has carried over to the officetel rental market: as of September, the average monthly rent for a Seoul officetel was 961,000 won, up at least 4% from a year earlier and close to the 1 million won mark. In tandem with rising rents, officetel investment yields also reached 5.15%, the highest since the Korea Real Estate Board began compiling statistics.
As rents and sale prices rise together in a virtuous cycle and the housing rental market rapidly shifts toward monthly rent, demand is flowing into mid-sized officetels that can offer stable asset values. New supply is also declining in core areas, including Seoul, making the scarcity of newly built officetels with proven locations and brands increasingly apparent.
Against this backdrop, new officetels with high-quality offerings are continuing to come to market in prime locations across the Seoul metropolitan area in the second half of the year, drawing strong interest from prospective buyers.
The Sharp First World Seoul, which POSCO E&C is developing in Sangbong-dong, Jungnang-gu, Seoul, within the Sangbong 9 Redevelopment Promotion Zone, will comprise one building with eight basement levels and 49 above-ground floors, offering 308 units. All units will have the popular exclusive area of 84 square meters. Alongside 999 apartment units already sold, the development will form a large-scale town with 1,307 units in total. Its location near Sangbong Station and Mangu Station offers a major transportation advantage as a “five-line station-area location,” with Line 7, the Gyeongchun Line, the Gyeongui–Jungang Line and KTX, plus the future GTX-B line.
Armuse Xi, which GS E&C is developing in Seongpo-dong, Sangnok District, Ansan-si, Gyeonggi-do, will comprise 370 officetel units and 984 apartments, for a total of 1,354 units. The officetels will also feature a single exclusive area of 84 square meters, offering living conditions as comfortable as those in apartments. Meanwhile, Yangwoo Construction is supplying 414 apartments for general sale within the 1,506-unit Uijeongbu Station Pellis Tower Yangwoo Naeanae development in Uijeongbu-dong, Uijeongbu-si, Gyeonggi-do. Boasting a location right next to Uijeongbu Station and the anticipated regional transportation boost from the future opening of GTX-C, it is drawing strong interest from end-users.

[email protected] Jeon Min-kyung Reporter