About 40,500 Cases in the First Half... Highest Since 2015
Properties Hit by COVID-19 Recession... Cash-Rich Buyers 'Jumjum'
[Asia Economy Reporter Jo Gang-wook] The nationwide commercial property transaction volume recorded the highest level since 2015 for the first half of the year. Commercial real estate, which was hit hard by the COVID-19 crisis, has flooded the market with listings, leading to a widespread phenomenon of so-called 'jupjup' among cash-rich buyers.
According to an analysis of actual transaction data from the Ministry of Land, Infrastructure and Transport by KB Management Research Institute on the 21st, the nationwide commercial property transaction volume in the first half of this year was about 40,500 cases, an increase of 11,000 cases compared to the same period last year. The nationwide commercial property transaction volume for the first half of the year showed a gradual decline after recording 41,300 cases in 2015, with 38,800 cases in 2016, 38,300 cases in 2017, and 31,900 cases in 2018. In 2019 and 2020, the volume dropped to the 20,000 range, with 27,900 and 29,500 cases respectively. However, it rose again to over 40,000 cases in the first half of this year, marking the highest level since 2015.
In the metropolitan area, commercial property transactions increased by 6,800 cases from 16,600 last year to 23,400 this year. The metropolitan area’s share of total commercial property transactions also rose by 1.6 percentage points from 56.3% to 57.9%. By type, collective commercial properties recorded 27,500 cases and general commercial properties 13,000 cases, representing increases of 38.5% and 34.9% respectively compared to the same period last year.
KB Management Research Institute analyzed, "In the metropolitan area, the upward trend in average transaction prices, centered on general commercial properties, has continued, resulting in the highest transaction volume since the collection of actual transaction data began."
Additionally, office investment yields in major provincial cities, which had sharply declined due to COVID-19, are showing signs of recovery. According to the Korea Real Estate Board, in the second quarter of this year, office investment yields in the five major provincial cities were 1.91% in Busan, 1.91% in Daegu, 1.45% in Gwangju, 2.17% in Daejeon, and 2.31% in Ulsan, all showing significant increases. Daejeon recorded the highest increase with a rise of 1.65 percentage points, followed by Ulsan with 1.59 percentage points, Busan with 1.35 percentage points, Daegu with 0.88 percentage points, and Gwangju with 0.47 percentage points.
KB Management Research Institute diagnosed, "Office prices, which temporarily fell due to anxiety caused by the pandemic spread last year, have stabilized due to factors such as vaccine supply, and are rising again, demonstrating high yields."
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