[Real Estate Investment] Money Flows into Commercial Buildings as Apartment Market Stalls... Transaction Volume Hits Record High

Q1 Seoul Commercial and Office Building Sales... Highest Transaction Amount and Volume Since Statistics Compilation
Transactions of Buildings Over 30 Billion Won Up 185% YoY... Surge in High-Price Deals
Gangnam-gu Tops in Transaction Volume and Amount by District... Mapo-gu Shows Highest Growth Rate in Transaction Volume

[Asia Economy Reporter Ryu Taemin] As the government's successive high-intensity housing regulations block investment demand for apartments and the like, the commercial and office real estate market is enjoying a spillover benefit. In the first quarter of this year, the transaction amount of commercial buildings in Seoul exceeded 7.2 trillion won, marking the highest level in 15 years since 2006.

According to Proptech company Real Estate Planet on the 12th, the transaction amount of commercial and office buildings in Seoul in the first quarter of this year recorded 7.2537 trillion won. This is a 46.7% increase compared to the first quarter of last year. The transaction volume also recorded 945 cases, up 35.2% from the first quarter of last year. This is the highest first-quarter record since 2006, when statistics related to transaction amounts and volumes began to be compiled.

Notable Increase in High-Value Transactions Over 30 Billion Won

Looking at building transactions in the first quarter, mid-sized buildings priced between 1 billion and 5 billion won had the highest number of transactions at 450 cases. This was followed by 5 billion to 10 billion won with 187 cases, 10 billion to 30 billion won with 148 cases, under 1 billion won with 120 cases, and over 30 billion won with 40 cases.

In terms of transaction volume growth rate, the number of building transactions priced over 30 billion won increased by 185% compared to the previous year, 10 billion to 30 billion won by 59.1%, 5 billion to 10 billion won by 46.1%, and 1 billion to 5 billion won by 35.1%. On the other hand, the transaction volume of buildings priced under 1 billion won decreased by 8.4% compared to the same period last year. Real Estate Planet explained that this is largely due to the overall rise in Seoul real estate prices, which reduced the supply of properties in this price range.

Noteworthy Increase in Transactions in Mapo District

Looking at building transaction volumes by autonomous district, Gangnam-gu had the highest number with 124 cases, followed by Jongno-gu (82 cases), Mapo-gu (76 cases), and Jung-gu (68 cases). Mapo-gu showed the largest increase in transaction volume among the 25 autonomous districts, rising 181.5% compared to the same period last year.

In terms of transaction amount, Gangnam-gu recorded the highest with 1.9281 trillion won, accounting for about 26.6% of the total transaction amount. Seocho-gu followed with 967.5 billion won. These two districts alone accounted for about 40% of the total transaction amount in the city.

The sharp increase in commercial and office building transactions is interpreted as a balloon effect due to strengthened housing market regulations. Professor Seo Jin-hyung of Gyeongin Women's University (President of the Korean Real Estate Society) explained, "As the loan and tax burden on high-priced housing increases, abundant liquidity in the market is flowing into the commercial building market. Especially, buildings in the Gangnam area are popular because of their high land price appreciation rates and ease of future disposal."