Jeonse deposits for officetels in Seoul have climbed to a record high, with the sharpest gains in mid- to large-sized residential units that can serve as apartment substitutes. The rise is attributed to tenants seeking alternative housing as apartment jeonse listings shrink and prices climb in the capital.
The average jeonse deposit for a Seoul officetel — a studio or apartment-style unit used as a home or office — stood at 237.37 million won ($172,000) in August, according to KB Real Estate on the 26th. That was up 1.09 million won, or 0.46%, from 236.28 million won the previous month, the highest level since KB Kookmin Bank began compiling the data in January 2011. The previous peak was 236.59 million won, set in December last year.
Mid- to large-sized units posted steeper gains. The average jeonse deposit for units larger than 60 square meters and up to 85 square meters rose to 472.36 million won, up 9.31 million won, or 2.01%, from a month earlier. Large units exceeding 85 square meters rose 0.53% from the previous month to 816.89 million won.
By contrast, the average jeonse deposit for compact units of 30 square meters or less slipped 0.08% to 166.34 million won, from 166.47 million won the previous month. Demand has concentrated on mid- to large-sized officetels with living space comparable to apartments, while studio-style units have shown relative weakness.
The strength in mid- to large-sized officetels is tied to a shortage of apartment jeonse in Seoul. After the government's Oct. 15 housing measures last year designated the entire city as a land transaction permit zone, apartment jeonse listings fell under rules such as the owner-occupancy requirement.
According to real estate big-data platform Asil, apartment jeonse listings in Seoul totaled 20,402 as of the 23rd of this month, down 12.3% from 23,263 at the end of last year. Prices have risen even as listings have shrunk.
Seoul apartment jeonse prices rose 1.1% this month from the previous month, more than double the 0.46% gain in the average officetel jeonse deposit over the same period. As apartment jeonse becomes harder to find and more costly, mid- to large-sized officetels with layouts similar to apartments have emerged as an alternative, analysts say.
A drop in supply is also cited as a factor pushing up officetel jeonse deposits. The number of new officetels coming onto the market in Seoul is projected to plunge to 1,700 units this year from 21,128 in 2021. New supply has fallen sharply even as demand rises.
The ratio of jeonse deposits to sale prices has also climbed to a record high. Seoul's average officetel jeonse-to-price ratio reached 84.2% this month, the highest since the data series began. The ratio, which compares jeonse deposits with sale prices, indicates that deposits are relatively high compared with sale prices.
Experts expect jeonse prices to stay strong for the time being, led by mid- to large-sized residential officetels.
"Young people prefer mid- to large-sized officetels with two rooms over low-rise multi-unit housing," said Sim Hyung-seok, a senior adviser at the Joyul law firm. "With the drop in officetel supply added on top, the rise in jeonse prices will continue."
"The heavy price burden of apartments and the shift toward monthly rent are driving movement toward officetels," said Ham Young-jin, head of the real estate research lab at Woori Bank. "Demand for officetels with good access to subway stations and strong community facilities will increase."
