Korean office transactions reach over US$14b in 2021

It exceeded the US$13.6b worth of transactions in 2020.

According to a recent JLL report, the total amount of office transactions in Korea hit a record KRW 17.1 trillion (approx. US$14.1 billion), breaching the previous record of KRW 16.55 trillion (approx. US$13.6 billion) set in 2020. 

JLL said, “Initially, the volume was expected to decrease compared to 2020 due to less number of deals in the market, but high-quality office sales were very well digested in the market thanks to the low-interest rate trend and abundant liquidity that lasted through the first half of the year. This year, the market was booming, with both CBD and Gangnam districts setting new highest per-pyeong prices.”

Here’s more from JLL:

The most notable deal this quarter was First Tower in Bundang, which was invested in and held by the National Pension Service in Mirae Asset Global Investments’ fund and was sold for about KRW 440 billion after 13 years. KORAMCO REITs & Trust is the new owner. 

The deal for KT Yongsan Building also closed this quarter. After KT AMC held it for ten years, it sold it to Welcome Savings Bank for KRW 225.5 billion this year, earning KT about 120% profit from the time of purchase in 2011. Welcome Financial Group will use the building as its HQ where all nine affiliates will gather. The company plans to relocate in 2H22. KT AMC also sold the KT Noryangjin Building this quarter.

KT AMC sold the building for KRW 123 billion to Daehan Real Estate Trust and Deoham consortium, and the consortium is planning to develop the building into youth housing in the station area. KT AMC improved liquidity and secured cash by selling KT Yongsan Building and KT Noryangjin Building this quarter.

Hana Insurance Building, located in the CBD, was also sold this quarter. Hana Insurance sold its office building in a sales-leaseback agreement to its affiliate Hana Asset Trust and it will now be operated as a REITs. The purpose of the transaction was to expand capital prior to the introduction of the new K-ICS system. 

The largest deal currently underway is the IFC Building in Yeouido owned by Brookfield. It is expected to be sold for an amount around KRW 4 trillion, contributing a significant portion of the expected office market transactions for 2022. 

In addition, the sale of E-Mart's headquarters and offices is underway and is scheduled to close within the first quarter of 2022. Krafton has been selected as the buyer. This large deal is worth more than KRW 1 trillion, and includes retail space, office space and a parking lot. 

In addition, Alpharium Tower in Pangyo, Euljiro Yuanta Securities HQ, Seoul City Tower in CBD, and Apro Square in Gangnam are under schedule for next year.