Plans are underway to convert vacant offices and commercial spaces into youth housing, aimed at reducing the financial burden on young residents. However, achieving significant cost savings will require addressing high purchase and conversion costs.
According to an analysis by Aju Economy on November 9, the median sale price of 328 studio apartments (18-33 square meters) purchased by public institutions in Seoul over the past year was 267 million won. During the same period, the median monthly rent for small studio apartments in Seoul was reported at 780,000 won, based on deposits ranging from 5 million to 20 million won. To stabilize housing costs for young people, monthly rents would need to be reduced by nearly half.
Last month, Lee Un-joo, a member of the Democratic Party, introduced a special bill to promote the conversion of idle commercial and office spaces into residential units and to facilitate the supply of rental housing. The bill includes provisions for converting long-term vacant commercial, office, and lodging facilities into rental housing, as well as streamlining permits and relaxing certain construction and parking standards, along with financial support.
While there are no clear guidelines for monthly rent, applying similar policies, such as the LH youth purchase rental program, which sets rents at 40-50% of market rates, and the happy housing standard at 60-80% of market rates, suggests a range of 310,000 to 620,000 won.
However, existing rental prices in areas with high vacancy rates are relatively low, which poses a challenge.
According to the Korea Real Estate Agency, the median monthly rent for small studio apartments in Dongdaemun District, which includes Jangandong with a vacancy rate exceeding 10%, is 730,000 won. In Gangseo District, where Balsan and Yeomchang are located, the median rent is 750,000 won, both lower than the 900,000 won in Gangnam and Seocho and 850,000 won in Seongdong District, where vacancy rates are below 10%.
For instance, if apartments were supplied at the youth purchase rental level in Jangandong, the monthly rent would be estimated at around 290,000 to 360,000 won. This structure requires supplying housing at significantly lower prices than the existing 730,000 won rental units.
The key issue is whether economic viability can be achieved solely through monthly rent. The cost of fully remodeling a standard studio apartment (33.06 square meters) ranges from 10.5 million to 15.5 million won. Particularly, converting office spaces to residential use requires plumbing work, ensuring adequate lighting and ventilation, and meeting fire safety and parking standards, which could lead to higher-than-average conversion costs. These burdens must be offset by the monthly rent.
There are precedents for similar conversions. In 2023, LH converted the former Gasan Haenamchae Hotel in Geumcheon District into 181 studio apartments. However, hotels typically have existing facilities such as bathrooms and heating/cooling systems, making the conversion burden lighter compared to standard offices.
An architect noted, "The differences depend significantly on the building's size, condition, and the usability of existing facilities. Smaller offices with simple layouts that can ensure lighting and ventilation for each unit are relatively advantageous." They added, "Utilizing existing structures and foundations can reduce construction costs and timelines compared to complete demolition and new construction. However, if the building is severely deteriorated or requires extensive structural reinforcement and facility upgrades, it could end up being more expensive than new construction."
* This article has been translated by AI.
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