There are divided interpretations in the industry over the building of Rain, which was once rumored to be sold.
Earlier, according to the industry, a building located in Seocho-dong, Seocho-gu, Seoul, owned by Rain, was put up for sale. Rain offered about 140 billion won for the sale price of the building.
Rain purchased the building for 92 billion won last year. The building was acquired by a corporation established by Rain himself, of which he owns a 60% stake and his wife Kim Tae Hee owns a 40% stake.
Park Jong Chan, an appraiser at Samil Appraisal Firm, said, “Rain bought the building when the real estate market was blooming, in line with the low interest rate trend. It’s believed that the purchase was made with a focus on future real estate disposable profits.”
If Rain’s futures are traded at 140 billion won, there will be about 50 billion won in market profits.
However, Rain’s agency, Rain Company, denied the sale of the building. The agency said, “It is not true at all that the building was put up for sale. We have never talked about the intention to sell it.”
The industry also predicted that the sale of Rain’s building is unlikely to take place in the market. Park Jong Chan said, “The price of Rain’s building is difficult for individuals to purchase. There is a high possibility that investment institutions will also avoid buying it at a time when real estate price declines are becoming visible due to interest rate hikes and economic downturn. It is difficult to sell at the reported amount.”
Kwon Do Hyung, a real estate agent, commented, “Rain and Kim Tae Hee bought the building with room for price hikes amid a booming real estate market with low interest rates, but now is a period of stagnation in the real estate market with high interest rates.”
Experts are also seeing that Rain’s building is at some risk. Park Jong Chan pointed out, “The small increase in rent and the rise in interest rates seem to be worsening the income yield. They may have to worry about reverse leverage.”
In addition, concerns were raised about the potential for vacancy rates due to the highest level of rent in an unstable economic situation.
Kwon Do Hyung said, “The vacancy rate is also on the rise in nearby commercial districts. If much of the vacancy in the building becomes a reality, they may have to bear hundreds of millions of won in monthly damages.”
He added, “The current situation in Korea’s real estate market is not only the housing market, but also markets such as golf courses, shopping malls, and sales, which were considered to generate high profits, are shrinking. There are opinions that the current situation in the domestic real estate market is similar to that of Japan.”
Park Jong Chan said, “‘High price’ can increase the desire to buy real estate and can generate high capital income, but on the contrary, it can also cause a high debt ratio. When purchasing real estate, we need to consider various risks.“
Source: Nate
