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Will Rain and Kim Tae Hee survive the declining real estate market only by “perseverance”?

There are divided interpretations within the industry regarding the Rain Building, which was once reportedly sold.

Earlier, according to industry information, a building located in Seocho-dong, Seocho-gu, Seoul, owned by Rain, was put up for sale. Rain offered approximately 140 billion won for the building’s sale price.

Rain bought the building for 92 billion won last year. The building was taken over by a corporation founded by Rain himself, in which he owns 60% and his wife Kim Tae Hee owns 40%.

Park Jong Chan, appraiser at Samil Appraisal Firm, said: “Rain bought the building when the real estate market was booming, following the trend of low interest rates. The purchase is believed to have been made with future income from the property in mind.”

If Rain futures are sold for 140 billion won, the market profit will be around 50 billion won.

However, Rain’s agency, Rain Company, refused to sell the building. The agency said “It is not true at all that the building has been put up for sale. We never discussed the intention to sell.”

Rain Kim Tae-hee Bi

The industry also predicted that the sale of the Rain Building was unlikely to take place on the market. Park Jung Chan said: “The price of the Rain building is hard for individuals to buy. There is a high probability that investment institutions will also avoid buying it at a time when real estate prices fall as a result of interest rate hikes and economic slowdown. It’s hard to sell for the reported amount.”

Kwon Do Hyung, a real estate agent, commented: “Rain and Kim Tae Hee bought a building with room for price increases in the face of a booming low-interest real estate market, but now there is a period of stagnation in the high-interest real estate market.”

Bi Rain Kim Tae Hee

Experts also recognize that the Rain building is at some risk. Park Jong Chan pointed out “A slight increase in rent and an increase in interest rates seem to be hurting income. They may have to worry about reverse leverage.”

In addition, there were concerns about the potential vacancy rate due to the highest level of rents in an unstable economic situation.

Kwon Do Hyung said: “The vacancy rate is also increasing in nearby shopping districts. If a large part of the vacancy in the building becomes a reality, they may have to pay hundreds of millions of won in monthly damages.”

Bi Rain

he added, “The current situation on the real estate market in Korea is not only the housing market, markets such as golf courses, shopping malls and sales, which were supposed to generate high profits, are also shrinking. There are opinions that the current situation in the domestic real estate market is similar to that in Japan.

Park Jung Chan said: ‘The ‘high price’ can increase the desire to buy real estate and generate high capital returns, but on the contrary, it can also result in a high debt ratio. When buying real estate, we must take into account various risks.

source: nate

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