A famous Korean actress is gaining attention for her successful real estate investment after putting her building up for sale at a much higher price than she bought it for.
On October 4, it was reported that actress Gong Hyo Jin had put a building she owns in Seoul’s Seogyo-dong for sale. Seogyo-dong is near Hongdae (Hongik University), a famous art college and a popular area for tourists.
According to the report, Gong Hyo Jin had listed the building for sale at ₩16.0 billion KRW (about $11.8 million USD). This roughly translates to about ₩130 million KRW (about $96,200 USD) per 3.3 square meters (or one pyeong in Korean).
The building was purchased by the building leasing company ROY714 in January 2016 for ₩6.30 billion KRW (about $4.66 million USD), which meant the property price increased by ₩10.0 billion KRW (about $7.40 million USD) in seven years. ROY714 is a corporation with Gong Hyo Jin owning 50% of the shares and serving as the representative. When purchasing real estate under a corporation name, one can borrow more money and get better interest rates than when purchasing as an individual.
Immediately after the purchase, she demolished the two-story building and constructed a new building with nine floors (3 underground and six above ground) in September 2017. The total floor area is 1,745.09 square meters, significantly larger than the previous building.
Individual-owned buildings are subject to a tax rate in the 40% range on rental income, but creating a corporation and engaging in a rental business can reduce income tax to about half. Experts predicted that even after subtracting the building’s construction cost, there would be at least ₩5.00 billion KRW (about $3.70 million USD) in market price difference.
A researcher at ValueMap stated that the price Gong Hyo Jin listed her building for is not significantly high, considering the value of the area and the building’s remodeling.
The average price per square meter of recently traded business and commercial facilities in Mapo-gu was between ₩80.0 million KRW (about $59,200 USD) to ₩90.0 million KRW (about $66,600 USD), and most of them were in Seogyo-dong, Yeonnam-dong, and Hapjeong-dong. Considering the fact that the building was remodeled and reconstructed and the future value of the Hongdae area, the price of ₩100 million KRW (about $74,000 USD) per 3.3 square meters does not seem significantly high.
— Jung Kyung Jin, a researcher at ValueMap
Gong Hyo Jin is known for acting in famous Korean productions, such as It’s Alright, This Is Love, Don’t Dare To Dream, Pasta, and When The Camellia Blooms.