South Korean property investment markets to remain subdued till year-end | Real Estate Asia

South Korean property investment markets to remain subdued till year-end

Investors are still highly selective.

South Korea’s total investment volume year-to-date in the office and logistics sectors stands at c.KRW7.5 trillion, based on preliminary data. The figure, attributable to 83% in offices and 17% in logistics, represents only 39% of the peak volume recorded during the same period in 2021. Despite the subdued volumes, unit pricing has remained relatively stable, particularly for offices. 

Notably, analysis of buyers in the office sector reveals domestic entities, such as the National Credit Union (Shinhyub) acquisition of Tower 8 for KRW549.0 billion. In contrast, offshore investors have shown greater interest in the logistics sector, including LOGOS. 

There was a notable lack of activity across several real estate sectors, however, including logistics, retail, and hospitality. Recently-closed and ongoing hotel transactions, such as New Kukje, are anticipated to undergo conversion to office space. The logistics sector is facing significant challenges, characterised by pricing pressures stemming from imbalances in supply and demand, and uncertainties surrounding leasing demand, particularly in cold and frozen storage. 

The outlook for Korea’s investment markets remains clouded until the end of the year, as investors, both domestic and foreign, continue to be selective. Despite the growing number of sellers eager to introduce new deals to the market, driven by challenges in refinancing due to rising capital costs and global portfolio mandates aiming to reduce office holdings, there is a limited pool of institutions with readily available capital. 

Aside from the exceptional performance of the office sector, which currently boasts near-zero vacancies, overall investment activity is similar to the declining trend globally. Investors are exercising caution, and there are many market assets up for sale, with more institutions seeking to sell than there are buyers. Only prime assets are likely to attract potential buyers, and even in these cases, adjustments to pricing expectations may be necessary to successfully close deals.

 

Join Real Estate Asia community
Since you're here...

...there are many ways you can work with us to advertise your company and connect to your customers. Our team can help you dight and create an advertising campaign, in print and digital, on this website and in print magazine.

We can also organize a real life or digital event for you and find thought leader speakers as well as industry leaders, who could be your potential partners, to join the event. We also run some awards programmes which give you an opportunity to be recognized for your achievements during the year and you can join this as a participant or a sponsor.

Let us help you drive your business forward with a good partnership!

Exclusives

How Metland Indonesia deals with weaker residential purchasing power
The real estate firm continues to expand with residences that are attractive to consumers because of pricing, the ‘growing house’ concept, and sustainable features.