Seoul office investment surges by 13% in Q1

Owner-occupiers and core assets support the city’s office deal activity.

Seoul’s office investment market recorded KRW3.0 trillion in transactions in Q1 2026, up 13% year-on-year from KRW2.7 trillion, according to Savills. However, this still represents only about 14% of the record KRW21 trillion achieved in 2025, reflecting a more selective investment environment.

Savills said sentiment remained subdued amid ongoing financial market uncertainty, with activity largely driven by well-capitalised investors and owner-occupiers. Some assets were withdrawn from sale or faced delays in closing. The firm added that a pool of sidelined capital could re-enter the market if interest rates and financing conditions stabilise.

The largest deal of the quarter was the acquisition of Seoul Square in the CBD by Korea Investment Real AMC from ARA Korea AMC for KRW1.2856 trillion. The transaction, backed by investors including Korea Investment Financial Group and Samsung-affiliated institutions such as Samsung Fire & Marine Insurance, required an extended financing process and a structure involving higher leverage and adjusted equity contributions. The asset will remain in office use despite earlier consideration of alternative uses.

Other major transactions included MDM AMC’s KRW220 billion acquisition of K-Finance Tower and an adjacent parking site in Myeong-dong from Keppel AMC. While partially vacant, the buyer is reportedly evaluating potential hotel redevelopment given improving tourism fundamentals.

Koramco REITs & Trust also acquired ETEVERS Tower in Namdaemun for KRW264.7 billion, with plans to reposition the ageing 1980s asset through refurbishment. Notably, ETEVERS participated as a co-investor, providing occupancy stability.

In another transaction, K-Square Gangnam 2 was sold by Koramco REITs & Trust to Hanwell, operator of retail brand Asung Daiso, for KRW355 billion. The deal, which had stalled in 2023 and 2024 amid pricing gaps in a high-rate environment, was ultimately completed at the upper end of expectations, reflecting sustained demand for prime, well-located assets and continued owner-occupier interest.

Savills estimated Seoul prime office cap rates remained stable in Q1 2026, at mid-to-high 4% on a nominal basis and low 4% on an effective basis. However, the five-year government bond yield rose 40 basis points quarter-on-quarter, narrowing spreads with cap rates. The firm noted that rising global interest rates, driven by geopolitical tensions and inflationary pressures, could place upward pressure on domestic yields and potentially push office cap rates higher.