First Half-Year Commercial Property Transactions Total 4,179
Ulsan Records Highest Decrease Rate
[Asia Economy Reporter Onyu Lim] Due to the impact of the novel coronavirus infection (COVID-19), the volume of commercial property transactions in the first half of this year decreased by approximately 7% compared to the same period last year.
On the 14th, the Commercial Property Information Research Institute analyzed the Ministry of Land, Infrastructure and Transport's actual transaction price disclosure system and found that the volume of commercial property transactions in the first half of this year recorded 4,179 cases. This is a decrease of 301 cases, or 6.7%, compared to 4,480 cases in the same period last year.
In the first half of the year, among the eight metropolitan cities including the Seoul metropolitan area, five saw a decrease in commercial property transaction volume. The region with the highest decline rate was Ulsan. Ulsan's commercial property transaction volume was 19 cases, down 56.8% from 44 cases in the same period last year. This was followed by Busan (49% decrease), Daegu (44.4% decrease), Seoul (7.2% decrease), and Gwangju (6.3% decrease).
There were also regions where transaction volume increased. In Incheon, the commercial property transaction volume in the first half was 311 cases, an 89.6% increase compared to 164 cases in the same period last year. Following were Daejeon (84% increase) and Gyeonggi (14.6% increase), where transaction volumes also rose.
Additionally, the commercial property transaction volume in other provincial cities in the first half was 558 cases, down 18.2% from 682 cases last year.
Investment returns on commercial properties are also declining. The investment return rate for medium to large commercial properties in the first quarter was 1.31%, down 0.38 percentage points from 1.69% in the fourth quarter of last year. The investment return rate for small-scale commercial properties in the first quarter was 1.17%, a decrease of 0.26 percentage points from 1.43% in the fourth quarter of last year. The investment return rate for collective commercial properties in the first quarter also decreased by 0.31 percentage points from 1.76% in the fourth quarter of last year to 1.45%.
Researcher Hyuntaek Cho of the Commercial Property Information Research Institute stated, "The volume of commercial property transactions and returns have decreased, and the risk of vacancies has emerged, leading to a decline in interest and popularity in commercial property investment compared to the past." He added, "However, promising commercial districts or commercial properties within major commercial areas still show signs of vitality, so the contrasting atmosphere by region and commercial district is expected to continue for the time being."
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