Impact of COVID-19... Nationwide Mid-to-Large Commercial Property Investment Yields Hit Record Low

[Asia Economy Reporter Lim On-yu] Due to the spread of COVID-19, the investment yield of medium-to-large commercial buildings nationwide recorded the lowest level ever last year.

According to the Commercial Building Information Research Institute on the 16th, the investment yield of medium-to-large commercial buildings nationwide last year averaged 5.10%.

This is the lowest figure since statistics began to be compiled in 2002. In the past, the investment yield of medium-to-large commercial buildings recorded a 5% range only three times: in 2009 (5.19%), 2012 (5.25%), and 2013 (5.32%).

The investment yield of medium-to-large commercial buildings declined for two consecutive years, following 6.91% in 2018 and 6.29% in 2019.

Last year, the region with the lowest investment yield for medium-to-large commercial buildings nationwide was Jeju (1.58%), followed by ▲Gyeongnam (2.85%) ▲Ulsan (3.40%) ▲Gyeongbuk (3.79%) ▲Chungnam (4.14%).

The regions with the highest investment yields were ▲Seoul (6.06%) ▲Gyeonggi (5.87%) ▲Daejeon (5.53%) ▲Gwangju (5.42%) ▲Busan (5.34%) ▲Jeonnam (5.23%), in that order.

The regions where investment yields dropped the most compared to the previous year were ▲Incheon (-2.71 percentage points) ▲Seoul (-1.84 percentage points) ▲Gyeonggi (-1.64 percentage points), indicating that the metropolitan area’s commercial building market was hit hard by COVID-19 last year.

Researcher Cho Hyun-taek of the Commercial Building Information Research Institute said, "Due to the spread of COVID-19 last year, the commercial building market showed an increase in vacancy rates and a decline in yields."