"Disposing of Unprofitable Commercial Properties Cheaply"…Commercial Real Estate Transactions Up in Jan-Feb, Prices Down

[Asia Economy Reporter Onyu Lim] From January to February, nationwide commercial real estate transactions increased compared to the same period last year, while the average sale price per 3.3㎡ decreased. This is analyzed as a result of quick-sale properties being traded amid a prolonged domestic economic downturn and the spread of the novel coronavirus infection (COVID-19).

According to the Commercial Information Research Institute on the 31st, the number of commercial real estate transactions over the two months of January and February was 1,443. This is a 21.8% increase from 1,185 transactions in the same period last year.

Commercial real estate transactions in the Seoul metropolitan area and major provincial cities accounted for 1,267 cases, representing 87.8% of total transactions.

The area with the largest increase in transactions was Seoul, which saw 167 more transactions compared to the same period last year. Incheon also recorded an increase of 88 transactions during the same period. Conversely, Daegu saw a decrease of 31 transactions, while Ulsan and Gyeonggi-do each decreased by 12 and 10 transactions respectively.

As transaction volume increased, the total transaction amount also grew. The total transaction amount for January and February was approximately 845.5 billion KRW, an increase of 383 billion KRW or 82.8% compared to 462.5 billion KRW in the same period last year. This indicates that there were many large-scale commercial real estate transactions at the beginning of the year.

On the other hand, the average sale price per 3.3㎡ of commercial real estate in January and February was 9.16 million KRW, down 2.71 million KRW from 11.87 million KRW in the same period last year.

Researcher Hyuntaek Cho of the Commercial Information Research Institute said, "Although the transaction volume of commercial real estate has increased, the average sale price per 3.3㎡ is declining due to the continued weakness in the offline market recently," adding, "With the recent spread of COVID-19, the commercial market is freezing further, increasing quick-sale properties, and this trend is expected to continue for the time being."