The volume of investment in commercial real estate in Seoul and the adjacent Bundang district came to 1.9 trillion won ($1.7 billion) through 20 deals in the first quarter of this year, data showed on April 24.
The figure rose 68 percent on-quarter, amid the realty market’s potential to deliver long-term returns, according to an estimate by commercial real estate service firm Cushman & Wakefield’s Seoul unit.
Courtesy of Seoul Square
“(Office building) prices are likely be sustained by ample liquidity as well as a low probability of a rate hike,” wrote Philip Jin, head of research at Cushman & Wakefield Korea. “However, yield compression and further downside risks of an economic slowdown are wildcards for the office investment markets.”
Of the entire transactions, the purchase of Seoul Square by Seoul-based investment bank NH Investment & Securities from Singapore-based Alpha Investment Partners took up over half, at 988 billion won.
The transaction for the grade A building closed on March 21, six months after the deal was made public. It was the second-highest deal in the Korean commercial property market, after LB Asset Management-led investors’ Centropolis purchase at 1.1 trillion won.
The 23-story building with a floor area of 132,800 square meters is located in Seoul’s central business district, next to Seoul Station. Its vacancy rate came to 2.8 percent as of end-March. Its major tenants include WeWork, the Korean unit of Mercedes-Benz and Siemens.
By size, the Seoul Square transaction was followed by a 256 billion won deal involving Korea Post Information Center and a 161 billion won transaction for Hanjin Heavy Industry’s Seoul headquarters building, in the first quarter.
More deals are expected to close in the second quarter of this year, including State Tower Namsan and Jongno Tower, both in the Seoul central business district.
By Son Ji-hyoung (firstname.lastname@example.org)