Pay attention to Daechi-dong, Seoul!

Why Should you pay attention to Daechi-dong, GangNam, Seoul for your investment porfolio?

Once I asked my old father who devoted pretty much of his whole life as a public high school English teacher in the most educationally popular area in Gangnam, Seoul. “Dad, why your school is so famous for high academic scores? Is it because of you, teachers? Are you great at teaching?” To my innocent question, my wise father said to me with a slight grin on his face, “No, Nahee…It is because of private institutes….and because of the parents’ enthusiasm..”

Yes, my father is right. When you google “Daechi- dong”, you will get the information about this area as below.

In Korea, Daechi-dong is called the ‘Mecca of private education’. It is due in part to the high concentrations of hagwons(same as private institute) in the area. The real estate prices in Daechi-dong are very high compared to that of other upscale neighborhoods in Gangnam. It is also the place which sends the most students by percentage to Korea’s so-called “SKY” universities: Seoul National University, Korea University, and Yonsei University. This began in the 1960s when hagwons began to open near the high-schools with the best academic reputations. Currently, there are over 950 of these hagwons in Daechi-dong.This educational infrastructure attracts many families to the area, and is one of the largest reasons for Daechi-dong’s high real estate prices.

As I am myself from the Daechi dong, I remember that I had to suffer from stress. For instance, to get higher scores on various subjects, I didn’t have any time to exercise and had to study at desk eating Whopper set of Burger King for dinner over many hours. So I gained lots of pounds in a short period of time! Okay, no more personal stories of high school days. Now, let’s take a closer look at how does this “private education fever phenomenon” affect real estate market of Daechi dong?

First, the price of the land per 3.3 square meter is the highest among other areas in GangNam.

Second, the monthly rental fee of commercial property is ranked as the highest among other areas in Gangnam and the monthly rental fee of the property is steadily increasing thanks to the demand.

Accoring to a statistics, the monthly rent of a Daechi dong’s commercial property is at USD 141 per 3.3 square meters. The monthly rent of the previous quarter of the same area was at USD 119 and this shows the Daechi dong is the only area which shows steady increase in monthly rent curve. If you look at the data of the other areas in GangNam such as Apgujeong-dong and Yeoksam-dong, you can easily recognize the prominent differences. ( Price of monthly rental fee of commercial property per 3.3. square meters in Apgujeong-dong: USD 112, Yeoksam-dong : USD 113 respectively)

If I pay a visit to my parents once a month, I can personally see lots of youngsters are eating their dinner, mainly fast food or Korean Kimbap which can also be eaten pretty quickly.

Most of the commercial building in Daechi dong is private institutes, fast food restaurants, bakeries, cafes and libraries. No wonder why renal fees are increasing! If you ever visit a Starbucks in Daechi-dong, you will be embarrassed because there is hardly any vacant seat available especially evening right before private institute begins its class. I guess about 90 percent of customers of Starbucks in the area are highschoolers doing their homework with laptop!

According to a news, Daechi –dong didn’t suffer from high vacancy rate even during IMF economic downturn. From an investment point of view, low vacancy rate tells a lot, which means you can expect a stable rental income which is one of top priorities when you invest in a property.

I can personally highly recommend you, world investors, to pay attention to commercial properties in Daechi-dong without hesitation. Trust me. I am from the area and I don’t like my parents live there because of too many cars and students which make my hometown super crowed. I hope my parents can walk freely without any stress as they used to do so long long time ago. For your better understanding, I would like to tell you that a small size Kimbap restaurant( 74 squre meters) can earn over 100,000 dollars a month. This Kimbap restaurant is far from subway station and main road but still “ the business has been great for the last 6 years“ Why is it so? Of course thanks to the high demand of “ private institutes “ . This kind of small commercial property has been formed a “ rented shop with a high premium” phenomenon here in Daechi –dong. The premium is priced about from 58,611 to 66,984 dollars. So that means, if you want to run a kimbap or similar food restaurant, you should pay that amount of money when you want to rent that property

I would like to keep you update about the Daechi-dong property market trend for your better understand as of today. Until then, have a wonderful day, Thank you.

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