Korean logistics investment volume expected to have reached KRW5.1t in Q4

This represents a 10% decline from Q4 2023.

According to a recent Savills report, the total transaction volume in Q4/2024 in Korea’s logistics sector, including expected closures and forward purchases, is projected to reach KRW5.1 trillion, representing a 10% decrease compared to 2023.

“However, when considering only hard asset transactions, the Q4 volume is estimated at KRW3.0 trillion, reflecting a 35% increase from 2023 (KRW2.2 trillion),” the report added.

Here’s more from Savills:

The rise in hard asset transaction volume is primarily attributed to an increase in transactions involving distressed assets, such as auction sales or contractor subrogation duties. Distressed asset transactions accounted for KRW1.4 trillion, equivalent to 48% of the total hard asset transaction volume.

Regionally, the hard asset transaction volume in the South-Central district recorded KRW1.3 trillion, marking the highest transaction volume among all districts in the SMA, followed by the Southeast district at KRW1.1 trillion.

Notably, in the Southwest district, hard asset transactions totaled only KRW430 billion. However, when forward purchase transactions are included, the volume in this district increased to KRW1.77 trillion, the highest among all districts in the SMA.

After peaking in 2021 during the surge in demand driven by COVID-19, transaction prices have undergone partial adjustments, particularly in dry and mixed-use storage types. These adjustments have been driven by cases where assets were acquired at revised prices compared to the initial forward purchase bids and transactions conducted through foreclosure auctions.

Koramco AMC acquired the Food Nuri Icheon Logistics Center, a mixed-use logistics center in Icheon for KRW90.8 billion through a private contract, reflecting a 35% discount from the appraised value during its initial failed auction. The center’s tenant, Jette, a 3PL operator, reportedly signed a long-term master lease agreement at the time of the transaction.

LaSalle IMC acquired Daedeok Logistics Center A and B in Anseong sequentially for a total of KRW618 billion. Developed by logistics specialist Jisan Group, the centers span 397,000 sq m of GFA and feature key tenants such as Daiso, Yongma Logistics, and Samdeok Logistics. At the time of sale, the assets were fully stabilized with 100% occupancy.

Wide Creek AMC/Heitman completed the acquisition of the mixed-use logistics center in Bangcho-ri, Anseong for KRW83 billion through a forward purchase agreement. Covering 36,700 sq m, the center is strategically located near National Highway #17, a preferred location for tenants. Heitman, the investor, re-entered the Korean logistics market with this acquisition following its successful exit from the Musinsa Logistics Center in Yeoju.

Starwood Capital, in partnership with Koramco AMC, acquired the Gobaek-ri logistics center in Icheon for KRW49 billion. The investment was executed through a Separately Managed Account jointly funded by Starwood Capital and Koramco REIT’s and Trust, with a total capital commitment of approximately KRW400 billion. Starwood Capital is expected to pursue additional logistics investments through this fund.

An analysis of investor nationalities in logistics center transactions, including both hard asset and forward purchases, shows that foreign investors accounted for 47% of the total transaction volume in 2024, consistent with 2023 levels.

Domestic institutional investors, however, have steadily reduced their activity, with their share dropping to 29% in 2024—a significant decline from 67% in 2022. Meanwhile, the share of corporations (excluding institutions) rose to 24% in 2024. Notably, the rise in transaction volume by corporations is largely driven by obligations related to subrogation duties rather than operational purposes.

Overall, domestic institutional investors have adopted a more cautious stance toward logistics market investments due to concerns over oversupply and a tenant-favorable market. In contrast, foreign investors remain active, accounting for nearly half of the total transaction volume in 2024, with this trend expected to continue in the coming year.