While the housing market in the metropolitan area has frozen due to the announcement of successive regulations targeting the housing market, small commercial and office buildings that have avoided the regulations are reaping windfall profits.
This October 15 housing market stabilization measure is called a "comprehensive set of regulations" as it lowers the loan-to-value (LTV) ratio from 70% to 40%, expands the land transaction permit system to block gap investment, and even restricts jeonse (rental deposit) loans.
As it becomes increasingly difficult to secure funds for home purchases through loans, funds are naturally shifting to non-residential assets such as small buildings and officetels.
Transaction growth is evident… Small buildings emerge as alternative investment destinations.
According to Real Estate Planet, the number of commercial and office building transactions priced between 1 billion and 5 billion won has steadily increased, from 834 in the first quarter of this year to 1,000 in the second quarter and 1,030 in the third quarter. Transactions priced between 5 billion and 10 billion won also increased from 132 to 171 during the same period.
Transactions of small and medium-sized buildings with a floor area of 3,300 square meters or less in Seoul are also continuing their upward trend, clearly showing the trend of liquid funds moving into commercial real estate following the strengthening of housing market regulations.
Another strength of commercial real estate is that there's no occupancy requirement. This allows for both rental income and capital gains, and the vacancy rate is relatively low. According to real estate statistics, the vacancy rate for small commercial properties in Seoul remains stable at around 51p3t.
Analysis suggests that the recent "no-funds building ownership" marketing campaign by some real estate agents has also impacted small-building transactions. YouTube broadcasts promoting the idea that building owners can become owners with minimal capital by utilizing deposits, loans, and government subsidies have attracted thousands of investors eager to invest small amounts of money.
Careful choices are necessary amidst the investment frenzy… Transactions must be made with trustworthy sources.
However, small buildings don't necessarily guarantee stable profits. Buildings with insufficient site analysis or unstable tenancy structures face vacancy risks and maintenance costs. Failure to carefully review tenant contracts, management fee structures, building condition, and permits can lead to significant losses, not to mention profits. Therefore, caution is advised.
Experts emphasize that, "Rather than being swayed by market sentiment, it's important to comprehensively analyze location, rental structure, and profit structure." It's especially important to select a location with proven transaction transparency and expertise.
To minimize risk, you should transact with a reputable commercial real estate brokerage firm or a trusted professional consultant. REMAX, a global real estate network, provides professional services such as building value appraisals, rental structure analysis, and investment return verification, helping investors make more reliable and rational decisions.
Check the listing: www.remax.co.kr Brokerage Information: www.remaxkorea.co.kr | 
