In the first half of the year, there were many people looking for small and medium-sized buildings worth around 5 billion won. About half of the buyers are owners of small and medium-sized businesses.

Choi Byeong-rok, director of Remax Wide Partners (pictured), said that small and medium-sized business owners who have set up in Gangnam and operated offices for over 10 years showed a lot of interest in purchasing small and medium-sized buildings for office buildings this year. Coupled with the low interest rate trend, an unprecedented jeonse crisis continues. It was analyzed that this is the same phenomenon as the increase in the number of ordinary people purchasing houses or applying for new apartments.


According to data analyzed by Director Choi, in the first half of this year, the number of small and medium-sized building transactions in Gangnam-gu, where small and medium-sized corporations' offices are concentrated, was 85, an increase of approximately 35% compared to 63 last year.

Small and medium-sized businesses that emerged as big players in the Gangnam-gu small and medium-sized building sales market in the first half of the year are mostly companies engaged in manufacturing and service industries with about 40 to 50 employees. Usually, an office space of about 100 to 200 pyeong is rented in the Gangnam area. It is known that the rent they pay per month, including management fees, is around 20 million won.

Director Choi said that when he meets CEOs of companies who want to purchase small and medium-sized buildings for use as office buildings, they confess that 'I brought in about 1 billion won to the building owner over the past 10 years,' and that the money is too precious.

He went on to say that there has been an increase in the number of cases of investing about 2 billion won in equity capital at low interest rates and using the remaining money to purchase office buildings using financial leverage. There have also been many cases of banks recognizing this need and recommending real estate-secured loans to corporate business owners. reported.

However, with the recent boom in building office buildings, there are many cases where some corporations have unreasonably purchased small and medium-sized buildings by minimizing their equity capital and increasing loans, raising concerns about insolvency. In particular, the rate of return for most small and medium-sized buildings traded in the first half of the year fell to the 3% range, raising the issue of interest burden due to future economic fluctuations and interest rate increases.

Director Choi said that in the past, most people who owned small and medium-sized buildings in the Gangnam area were individuals or corporations with sufficient capital. They had a high equity capital ratio, so they had enough room to withstand even if the real rent fell and the rate of return fell. As a result, even if rental income decreased, Director Choi said. He said that he prevented the decline in sales prices of small and medium-sized buildings without lowering the sales prices.

However, in the case of small and medium-sized corporations that have recently purchased buildings, they have used financial leverage as much as possible, and if these corporations are unable to withstand the excessive financial burden and sell off their assets, the sale price may fall significantly.

◆Byungrok Choi, Director, Remax Wide Partners

△Hongik University International Business Major
△Team leader of a foreign real estate company in 2007
△Director, Remax Wide Partners, 2009
△Currently performing leasing services and supervising sales of many large buildings in Korea