Supply of 'Hillstate Changwon Central' Avoiding DSR Regulations Underway

- Rarely subject to DSR regulations following LTV and DTI for residential lodging facilities
- The last facility allowed in Changwon City's central commercial area

The DSR (Debt Service Ratio) regulation, implemented last July, will enter its second phase starting in January. If the total loan amount exceeds 200 million KRW, a DSR of 40% will be applied. With the enforcement of DSR phase 2, when taking out loans exceeding 200 million KRW, borrowers can only receive loans up to 40% of their annual income (approximately 50% for secondary financial institutions).

From July this year, the target will expand to those with total loans exceeding 100 million KRW. Therefore, the lower the verifiable income and the higher the existing loans, the more the additional loan limit will be significantly reduced. Ultimately, the loan gap based on income has widened. In effect, since more cash is needed, the government is sending a signal of "if you don't have money, don't buy."

Because the amount available for loans will sharply decrease due to this regulation, the market inevitably expects a decline in purchasing power for complexes subject to the regulation. Even officetels, which had been popular as non-residential products, will now be subject to DSR regulations, significantly reducing the loanable amount and likely shrinking demand.

As a result, the market is keenly watching whether any non-regulated products remain. This is because non-residential properties such as officetels, mixed-use residential-commercial buildings, commercial buildings, office buildings, and land have now become subject to regulations.

However, at this point, lifestyle lodging facilities, which are relatively easier to obtain loans for, have internal structures and floor plans very similar to apartments but are classified as "non-residential" under building laws, unlike apartments. Therefore, they are exempt from acquisition tax surcharges and holding tax burdens, and resale of pre-sale rights is allowed. This contrasts with officetels, where resale is only permitted for units under 100 rooms.

Additionally, lifestyle lodging facilities are exempt from heavy taxation on multi-homeowners as well as strengthened LTV (Loan to Value ratio), DTI (Debt to Income ratio), and other regulations. Furthermore, projects sold before January 2022 based on the recruitment announcement date are excluded from the DSR phase 2 regulation, making these products broadly easier to finance.

Currently, in the real estate market, the lifestyle lodging facility complex that has avoided LTV, DTI, and DSR regulations is ‘Hillstate Changwon Central.’ Supplied by Hyundai Engineering, ‘Hillstate Changwon Central’ is the first ‘Hillstate’ lifestyle lodging facility to be supplied in Changwon City, Gyeongnam, which was launched as a special city.

It is being constructed in the Seongsan-gu Sangnam-dong area, the central commercial district of Changwon City, with two buildings ranging from 6 basement floors to 46 above-ground floors. The lifestyle lodging facility consists of 296 units with exclusive areas of 88㎡ and 102㎡, located from basement level 1 to the 4th floor, along with a high-end commercial facility ‘Hills Avenue Tier.1’ (total 86 units) in the sky lounge.

‘Hillstate Changwon Central’ is the last facility allowed to be built in the central commercial district under Changwon City’s urban planning ordinance (No. 1414) (officetels, lodging facilities, and multi-family housing are not permitted), so it is expected to carry the value premium of the ‘Hillstate’ brand.

This complex incorporates product designs befitting the ‘Hillstate’ brand. It is designed with a specialized exterior and a hotel-style lobby, rising 46 floors high. For the first time in Changwon City, an infinity pool is applied, allowing residents to enjoy an exceptional city view. The top floors, 44 to 46, include a sky lounge where residents can enjoy both daytime and nighttime views from a higher elevation.

The interior spaces of the complex are mainly oriented southward, with all units designed with approximately 2.45-meter ceiling heights and open balconies. Complimentary features include a hybrid 3-burner cooktop, built-in refrigerator and freezer, kimchi refrigerator, system air conditioning, hardwood flooring, and porcelain tiles. Hotel concierge services, breakfast, valet parking, laundry, and car wash services are also provided, along with community facilities such as a fitness center and golf practice range.

The high-end commercial facility ‘Hills Avenue Tier.1,’ built alongside the lifestyle lodging facility, is newly designed in terms of layout, flow, and facade by a specialized commercial and office consulting firm, distinguishing it from other commercial facilities in the area. Unusually for a commercial facility, it offers 100% self-parking spaces and valet parking services.

Nearby the complex are over 60 public institutions, numerous public enterprises, and companies such as LG Electronics, Hyundai Rotem, Hyundai Wia, and Hyundai Mobis located in Changwon Green Tech Valley (Changwon National Industrial Complex), making demand acquisition easy. Changwon Central Station and Changwon Station, which provide KTX access, are adjacent, and the complex is close to Changwon’s main road networks including Changwon-daero, Won-i-daero, and Jungang-daero, facilitating broad regional demand.

‘Hillstate Changwon Central’ is rare among lifestyle lodging facilities in being exempt from LTV, DTI, and DSR regulations, and as the last facility in Changwon City’s central commercial district, it is expected to have scarcity value. Benefits to reduce financial burden are also offered, such as a fixed first deposit of 20 million KRW (10% of the contract price payable in installments) and 50% interest-free intermediate payments (with 10% self-payment on the 6th installment).

The sales promotion center is currently grand open and welcoming visitors.

This content was produced with the assistance of AI translation services.