Korea real estate investment volume hits USD2.8b in Q2

The A Plus Asset Tower was sold for a record USD36,560 per pyeong.

Investors have become conservative following the rising interest rates in Korea. However, Colliers says core office unit prices have been increasing steadily due to limited buying opportunities and high preference for the sector. 

Going forward, unit prices in Seoul’s Gangnam business district (GBD) are expected to continue rising.

Here’s more from Colliers:

Despite the rising interest rate trend, investment volume for Q2 2022 totalled KRW3.4 trillion (USD2.8 billion). Strong preference for core assets in the GBD area drove robust increases in office transaction prices. Additionally, technology occupiers’ preference for the GBD has helped vacancy rates in the area remain the lowest among the three major office districts. 

Notably, the sale of the A Plus Asset Tower hit a new record for South Korea with a unit price of KRW47 million (USD36,560) per pyeong. The next highest price was Hyongji Building, also located in the Gangnam area. The sale of the Yeoksam-dong 718 Building and the Apro Square Building in the GBD marked other notable transactions during the quarter.

Forecast

As we head into Q3, we expect more major transactions to close during the quarter or before year-end. Several large ongoing deals, such as IFC, Shinhan Finance Investment Building, Seoul City Tower, Seosomun Donghwa Building, Jongno Tower, Concordian Building and the Pfizer Korea Myeongdong building, will likely make up the major transactions in the rest of 2022. 

However, we expect the number of prime office investments in Seoul to decrease due to the prevailing conservative sentiment, limited availability and rising interest rates.