RE Voyeurism: Ellui City, Seoul Edition


Officetels are residential/commercial zoned mini-apartments in Korea.  This one happened to be in my neighborhood, which has great location characteristics:

  • Next to Lotte World Tower, the 5th tallest building in the world and tallest in Korea.  The combination of this, the Lotte World Mall, Lotte World Department Store, and Lotte World (1 of 2 largest theme parks in Korea) within Instagramming distance of the project puts it in one of the most trafficked tourism areas in Seoul.
  • Next to Samsung SDS, National Pension Service (Korea’s SWF), Coupang, other large employers besides Lotte, who owns the subdistrict.
  • Next to 2 existing subway stops, with construction happening on a 3rd gives it premium access.

The location can’t get better for a residential district in South Seoul.  Office-adjacency wise, you can probably find better around Gangnam Station proper and the Samseong (Trade Tower) areas, but Jamsil is a rising office subdistrict.


Return characteristics are a bit flimsy for foreigners though:

  • Smallest units are ~170 SF, and go for 195m KRW, which is more or less $180k.  Foreigners will pay an acquisitions tax on top of this.
  • Payment structure is 10% down, 60% over a 2-year construction period, with the remainder due at the end.
  • Residents only can qualify for a interest free loan for the 60%, during the construction period, which converts in a permanent IO loan @ 3% after delivery.
  • Rents forecasted at about 750k KRW, with a 10m KRW deposit.  You are reading that right, welcome to the Korean lease system.
  • Returns for domestics would thus be around ~8% on equity.  For foreigners, according to my calculations, maybe 3-4% at full occupancy.
  • They claim that actual market prices for this type are about 240m, so you would instantly have some cap gains at delivery.

Verdict: worth a look but pass.  I like the product type; Korea faces the same demographic issues as Japan – lots of singles who marry (if ever) at older ages – and the product type is amenable to AirBnB’ing.  The numbers more or less check out, but the lack of financing makes it not so good for me.  Also, KRW/USD is not particularly cheap ATM.

Also didn’t like the shifty typical RE-agent ways of the sales team.  An agent initially told me it was a 100m KRW sales price when I was passing by him on my bike, then the actual price turned out to be 2x.  Also claimed it was only 50% sold but then when we looked at the units, only 3 of the 10+ floors are still available.  Also, the closer guy they brought in to try to pressure us had these smoke-stained lips and kept leaning in with cigarette breath.  He looked disinterested the whole time.

Leave a Reply

Fill in your details below or click an icon to log in: Logo

You are commenting using your account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s