Seoul, South Korea – The security deposits for officetels in Seoul have seen a significant surge this year, driven primarily by growing concerns over rental fraud, according to recent data from the real estate information platform, Dabang.   

The average security deposit for Seoul officetels reached 247.13 million won (approximately US$185,000) from January to October, marking an 11.9% increase compared to the previous year's annual average of 220.86 million won. While the average security deposit had experienced relatively minor fluctuations in the preceding years, it has surged by over 20 million won this year alone.   

Similarly, monthly rent security deposits have also witnessed a sharp uptick. From January to October, the average monthly rent security deposit climbed to 57.51 million won, representing a substantial 42% increase from the previous year's 40.51 million won. This is in stark contrast to the more modest 10% annual increases observed in the preceding years.

Experts anticipate that the upward trend in monthly rent security deposits will continue into next year. In January, the average security deposit stood at 48.7 million won, which escalated to 57.16 million won by March and further soared to 68.8 million won by October. This indicates a growing trend of officetel owners demanding higher security deposits, despite the traditional prevalence of monthly rental payments in the officetel market.

Conversely, the actual monthly rent for a 10 million won security deposit has only increased by 2.6% from 780,000 won to 800,000 won year-on-year.

Analysts attribute this surge in security deposits to a shift in rental preferences. With concerns over rental fraud plaguing the villa and multi-family housing markets, many tenants are turning to officetels as perceived safer alternatives. As a result, the demand for officetel rentals, particularly those with substantial security deposits or a combination of security deposits and monthly rent, has surged, driving up prices.

"People are wary of villa rental fraud and find it burdensome to move into apartments," said a spokesperson for Dabang. "As a result, many are opting for officetels as a more secure housing option."

[Copyright (c) Global Economic Times. All Rights Reserved.]