SEOUL, March 2 (Korea Bizwire) – Returns from investments in studio apartments in South Korea edged down in February from a month earlier due to oversupply, data showed Thursday.
The annual returns from investments in studio apartments, better known as “officetels” in South Korea, stood at 5.09 percent in February, down from 5.11 percent in January, according to the data compiled by KB Kookmin Bank, the country’s biggest retail lender.
The annual returns reached 6.02 percent in August 2010, but they have either moved in a tight range without showing any volatile changes or remained little changed for the past two and a half years.
The data also showed that the average sales price of a studio apartment fell in February for a second straight month.
The average sales price of a studio apartment came to 225.8 million won (US$197,000) in February on average, down from 225.9 million won a month earlier.
Meanwhile, the average “jeonse” price of a studio apartment stood at 174 million won in February.
Under South Korea’s decades-old jeonse system, tenants transfer a large lump-sum deposit, known as key money, to the landlord which is then returned at the end of the rental agreement, which usually lasts two years. During the lease period, the tenants do not pay monthly rent.
The decline in the average sales price of studio apartments and the annual returns from investments in studio apartments is blamed on an oversupply of such housing in recent years.
The number of studio apartments sold in Seoul from 2005 to 2010 came to between 600 and about 5,000 per year, but the number soared to 19,000 last year.