Officetels are gaining favor as real estate investments

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Officetels are gaining favor as real estate investments

Investors seeking more lucrative returns have been turning their eyes to officetels, dual-purpose buildings used for both commercial and residential purposes, with residential units often for single-person households.

According to real estate information provider Real Today, officetel sales totaled 2.82 trillion won ($2.53 billion) in the first half of this year, a 3.4 percent increase from 2.73 trillion won a year ago.

Seoul was the most active region, with 1.18 trillion won made in the first half alone. That’s roughly 42 percent of officetel sales in the first six months.

The province of Gyeonggi trailed behind with 680.6 billion won, while Busan took third place with 389 billion won and Incheon came in fourth with 276.2 billion won.

The total number of officetel units sold was 18,049, a 5.3 percent increase from the previous year’s 17,133.

Busan saw the biggest jump in number of units sold compared to a year ago, a 33.8 percent increase. There were 771 additional units sold in the first half compared to last year, bringing the total to 3,048 units.

Incheon trailed behind with 346 additional units sold to total 1,851 units. This is a 23 percent increase.

Daejeon took third with 175 additional units, though this is double the number of officetel units purchased there compared to a year ago. While 177 units were sold in the first six months of last year, this year during the same period, 352 units were sold.

“The scarcity of small-size officetel units has gone up, since the number of single-person households for the first time exceeded five million last year,” said Yang Ji-young, head of the research center at Real Today.

“The popularity of small-size officetel units is continuously rising as it is relatively easier to invest in officetels since the size of investment is smaller than investing in apartments.”

Yang projected that more officetel units will be purchased in the second half, with current record-low interest rates affecting returns on deposits and tighter government loan regulations affecting apartment purchases.

The government on Thursday tightened its regulations on group loans, also known as syndicated loans, requiring those applying for such loans to submit income documents to financial institutions, which was previously not necessary.

In the second half, roughly 9,000 officetel units are expected to be supplied to the market.

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