Yeouido business district in Seoul is fast emerging as the most promising spot for commercial real estate transactions among other regions in Seoul, buoyed by higher demand from both buyers and sellers, according to market experts on July 24.
This comes despite the recent surge in the price of Yeouido property assets.
More office buildings in Yeouido will be up for sale as the anticipated influx of new large-scale office space is likely to increase the vacancy rate, making property owners more inclined to sell to hedge risks. In the meantime, those the buyers will see more room for profitability through renovation projects to add value.
An aerial view of Yeouido.
“Many buildings in Yeouido are aged, so there is room for investors to improve floor area ratio of such buildings and make use of the property with higher efficiency, by reconstructing or redesigning them,” Philip Jin, head of research at Cushman & Wakefield Korea, said at a press conference held in Seoul.
This trend is coupled with higher tendency of financial institutions to sell off real estate assets. It stands out in Yeouido, an island on Han River where over half of the commercial tenants are financial companies.
“Financial institutions are looking for ways to secure capital gains from their investments, and in particular, insurance firms are in need of higher cash liquidity by selling properties,” Jin said.
Jin cited the ongoing biddings for real estate asset sales that might conclude by the year-end. These include prime office buildings in Yeouido, owned by companies such as NH Investment & Securities, Meritz Fire & Marine Insurance and KB Kookmin Bank. Mirae Asset Global Investments is also mulling the sale of KTB Investment & Securities’ headquarters building in Yeouido.
The remarks came amid a record run in the volume of commercial properties transactions in Seoul. In the first half of 2019, real estate buyers signed deals worth acombined 5.9 trillion won ($5 billion), up 5.4 percent on-year.
Jin said the recent key rate cut in Korea will lead to higher liquidity here, making it easier for investors to raise funds.
By Son Ji-hyoung (email@example.com)