Gangnam Station 10.5 Billion Won Small Building Transaction Analysis: 5.2 Billion Won Profit in 8 Years, Secrets to Golden Commercial Area Investment Success
Gangnam Station area, being the center of business and commerce in South Korea, is a core commercial district that always boasts high real estate value. Based on its vast foot traffic and abundant hinterland demand, it remains an attractive region for commercial real estate investors. News of a small building in this core Gangnam Station commercial district achieving a substantial profit, almost equivalent to the initial investment amount, in just 8 years is attracting significant attention from many investors. Today, we will delve into this transaction case to analyze in depth the secrets to investment success in the Gangnam Station golden commercial area and the key strategies for investing in the Gangnam Station commercial district.
Gangnam-gu Yeoksam-dong 827-42, Transacted for 10.5 Billion Won
The building we will examine is located at Yeoksam-dong, 827-42 in Gangnam-gu, and it was transacted for 10.5 billion Won in February 2025. This building was previously transacted for 5.3 billion Won in June 2016, approximately 8 years prior.
Key Features and Location Analysis of the Transacted Building:
- Prime Location in Gangnam Station Golden Commercial Area: This building is situated in the golden commercial area of Gangnam Station, characterized by extremely high foot traffic and active commercial activities. The surrounding area is concentrated with large office buildings, renowned academies, and various commercial facilities, making it vibrant on both weekdays and weekends.
- Gangnam Station Area: Located within walking distance of Gangnam Station. Gangnam Station is a core transfer station where Seoul Subway Line 2 and Sinbundang Line intersect, and it serves as a terminus for numerous intercity bus routes across the country, boasting overwhelming public transportation convenience. This plays a decisive role in securing rental demand for commercial spaces or offices within the building.
- Commercial Building in the Low 10 Billion Won Range: A sale price in the low 10 billion Won range can be considered an accessible price point among small buildings in the core commercial district of Gangnam Station, potentially increasing investment accessibility. The building's use as a '근린생활시설' (Neighborhood Living Facility) offers flexibility in tenant composition, suitable for various commercial activities.
- Elegant Building Design: The building's elegant design with a glass exterior enhances its visual appeal and ensures visibility, contributing to the increase in building value. Especially in commercial districts where commercial facilities are important, the building's exterior design positively impacts tenant attraction and brand image.
- Optimized Architectural Design: A building designed to optimally utilize the building coverage ratio (건폐율) and floor area ratio (용적률) secures a large total floor area relative to the land area, maximizing rental space. This is a significant factor in increasing investment yield.
- Road Condition and Building Status: It fronts a 4m road. Buildings on the back streets of Gangnam Station often face 4m roads, which affects vehicle and pedestrian access. The building has a scale of B1F to 6F, with a total floor area of 220.00 pyeong (approx. 727.27㎡).
5.2 Billion Won Profit in 8 Years, The Secret to Investment Success
Several factors contributed to this building's ability to achieve such a remarkable profit of 5.2 billion Won in just 8 years.
Investment Profit Analysis:
- June 2016 Transaction Price: 5.3 billion Won (approx. 74.65 million Won per pyeong)
- February 2025 Transaction Price: 10.5 billion Won (approx. 148.08 million Won per pyeong)
- Holding Period: Approximately 8 years and 8 months (approx. 8.66 years)
- Total Capital Gain: Approx. 5.2 billion Won (simple capital gain)
- Annual Capital Gain: Approx. 603 million Won (simple capital gain)
- Monthly Profit: Approx. 50.25 million Won (simple capital gain)
Over approximately 8 years, the building's price increased by 5.2 billion Won, or about 98%. The price per pyeong also nearly doubled in 8 years. This calculation is based solely on simple capital gain and does not include rental income generated during the holding period, building maintenance costs, taxes, etc.
Key Secrets to Investment Success:
- Securing a Prime Location: Acquiring a prime location in the Gangnam Station golden commercial area was the most fundamental prerequisite for successful investment. The power of the location guarantees value that does not change over time.
- Identifying Potential for Value Increase: At the time of purchase in 2016 for 5.3 billion Won, the price was already in the high 70 million Won per pyeong range. However, the insight to accurately assess the growth trend of the Gangnam Station commercial area and the physical/architectural potential of the building (e.g., utilizing floor area ratio) and invest was crucial.
- Maximizing Building Marketability: The elegant design and optimized architectural design enhanced the building's marketability, contributing to attracting high-quality tenants and commanding high rents. This drove both stable rental income and building value appreciation.
- Long-Term Perspective and Leveraging Market Conditions: The investor held the building for approximately 8 years, leveraging the growth of the Gangnam Station commercial area and the upward trend of the real estate market during this period. The strategy of waiting for value appreciation from a long-term perspective, rather than reacting to short-term price fluctuations, proved effective.
- Consistent Management and Operation: Consistent management and operation are essential to maintain and increase the building's value. Maintaining stable tenant relationships and managing the building's condition likely contributed to maximizing returns.
Gangnam Station Commercial Area Small Building Investment, Success Strategy
Investing in small buildings in the Gangnam Station commercial area is an attractive investment method with the potential for high returns. However, a successful investment requires the following strategies:
- Thorough Commercial Area and Location Analysis: The Gangnam Station commercial area is very vast, and its characteristics vary significantly depending on the specific location. Thoroughly analyze the types of foot traffic (office workers, students, general consumers), consumption patterns, nearby competitors, and development boosts to accurately determine the investment value of the building's exact location.
- Identifying Building's Potential: Accurately assess not only the current condition of the building but also the zoning district, building coverage ratio, floor area ratio, and other architectural regulations to analyze the potential for value appreciation through new construction, expansion, or remodeling. Whether the plot shape is suitable for optimal architectural design is also an important factor.
- Building Design and Utilization Strategy: An attractive building design and efficient space utilization tailored to the characteristics of the commercial area increase rental competitiveness. Develop a clear strategy on how to utilize the space (e.g., commercial, office, specific business types like academies or clinics) and attract tenants from business types that have stable demand is important.
- Expert Assistance: Investing in small buildings in core commercial districts like Gangnam Station requires significant investment capital and complex analysis. It is important to seek assistance from a reliable real estate expert for market analysis, building valuation, legal review, and development planning.
Real Estate Expert's Perspective, Gangnam Station Small Building Investment Outlook
The Gangnam Station area is likely to remain a favorable location for small building investment in the future, supported by consistent foot traffic and active commercial activities. Particularly, small buildings located within the Gangnam Station area and in actively commercial zones can continue to expect stable rental income and high capital gains. The concentration of large office buildings and academies providing a strong rental demand is a constant strength of the Gangnam Station commercial area.
From a long-term perspective, investing in Gangnam Station small buildings can be a stable means of asset growth that outpaces inflation. However, it requires a high initial investment cost, an understanding of the pace of change in the Gangnam Station commercial area, and a strategic approach to maximize the building's potential. Making wise investment decisions based on thorough analysis and expert advice is crucial.
Detailed Transaction Analysis
Let's examine the specific transaction details of the building at Yeoksam-dong 827-42 in Gangnam-gu.
※ Transaction Details
- Location: Gangnam-gu Yeoksam-dong 827-42
- Subway Station: Gangnam Station
- Transaction Date: February 2025
- Sale Price: 10.5 billion Won
- Land Price (Per Pyeong): 148.08 million Won
- Land Area: 70.91 pyeong (234.4㎡)
- Building Area (Total Floor Area): 220.00 pyeong (727.27㎡)
- Zoning District: Third Class General Residential Zone
- Floors: B1F ~ 6F
- Road Condition: 4m
- Year of Completion: January 27, 2016
- Official Standard Land Price (공시지가): Approx. 37.52 million Won (Per Pyeong)
- Land Price Relative to Official Standard Price: Approx. 3.95 times
※ Past Transaction History
- June 2016: 5.3 billion Won sale (74.65 million Won per pyeong)
- February 2025: 10.5 billion Won sale (148.08 million Won per pyeong) (Held for approx. 8 years)
- 8 years: 5.2 billion Won capital gain
- Annual: 650 million Won capital gain
- Monthly: 54.17 million Won profit (Simple capital gain analysis only)
This transaction is a case where a small building with a land area of approximately 71 pyeong and a total floor area of 220 pyeong (B1F to 6F) was transacted for 10.5 billion Won, at approximately 148.08 million Won per pyeong. It is located in the core commercial district of Gangnam Station and belongs to the Third Class General Residential Zone, completed in 2016 as a relatively new building. Compared to the 2016 transaction price, it recorded a capital gain of approximately 5.2 billion Won in 8 years, clearly demonstrating the potential for successful investment in the Gangnam Station commercial area.
Conclusion: Gangnam Station Small Building, Timeless Golden Investment
The case study of the 10.5 billion Won small building transaction in Yeoksam-dong, Gangnam-gu, clearly demonstrates the overwhelming investment value and potential of the Gangnam Station golden commercial area. Achieving a remarkable profit of 5.2 billion Won in 8 years was not merely luck, but a result of combining securing a golden location, maximizing the building's marketability, and adopting a long-term investment strategy.
Investing in Gangnam Station small buildings requires a high initial investment cost, but it is an attractive option that offers potential for stable asset growth and high investment returns based on stable rental demand, high commercial activity, and future development potential. We hope you seize opportunities for investing in small buildings in the Gangnam Station golden commercial area through thorough analysis and expert advice.