Office Investment Yield Hits 12-Year High... "Small Units Popular Amid Domestic Downturn"

Seoul Office Investment Yield Highest Nationwide at 8.78%
Jeju Records Lowest Yield at 2.4%

[Asia Economy Reporter Onyu Lim] As the domestic economy slows down, demand for small offices with affordable rent has increased, leading to the highest nationwide office investment yield since 2008. The region with the highest yield was Seoul, while the lowest was Jeju Island.

On the 19th, the Commercial Information Research Institute analyzed statistics from the Korea Real Estate Board and found that last year, the nationwide office investment yield recorded 7.67%. This is a 0.06 percentage point increase from 7.61% the previous year, marking the highest figure since 13.74% in 2008.

By region, Seoul had the highest office investment yield last year, recording 8.78%. Within Seoul, the area with the highest yield was Cheonho at 10.03%, while the lowest was Chungmuro at 5.79%.

Following Seoul, the regions with high investment yields were Gyeonggi (8.6%), Incheon (7.43%), Daegu (6.79%), and Busan (6.09%).

The region with the lowest office investment yield was Jeju at 2.4%, followed by Chungbuk (2.76%), Chungnam (3.01%), and Gyeongnam (3.06%).

Researcher Hyuntaek Cho of the Commercial Information Research Institute stated, "The nationwide office vacancy rate has been steadily decreasing since the second quarter of 2018," and added, "Although the number of companies is steadily increasing, supply seems unable to keep up with demand." He further explained, "This phenomenon appears to have influenced yields as well, with actual office investment yields being relatively higher than those of other income-generating real estate investments such as commercial buildings and officetels."

The Commercial Information Research Institute forecasts that, barring economic variables, the popularity of small offices will continue to rise. Researcher Cho said, "Recently, with the increase of one-person and small-scale companies and the domestic economic downturn, demand for small offices such as shared offices and section offices with affordable rent is increasing."