[2023 Alternative Investment Forum] "Investment Opportunities in Data Centers, Hotels, and Coliving During Downturns"

Juyongguk, Head of IB2 Division, Mirae Asset Securities

"During the real estate downturn caused by rising interest rates and the expansion of remote work, data centers, hotels and resorts, and the co-living market will provide investment opportunities."

Joo Yong-guk, Head of IB2 Division at Mirae Asset Securities, made this forecast on the 4th at the 1st Asia Economy Alternative Investment Forum held at the Conrad Hotel in Seoul, under the theme "Global Alternative Investment Issues and Asset Allocation Strategies."

On the 4th, at the 1st Asia Economy Alternative Investment Forum held at Conrad Hotel in Yeouido, Seoul, Juyongguk, Co-Head of IB 2 at Mirae Asset Securities (Executive Director), gave a keynote presentation on new investment opportunities amid the commercial real estate crisis. Photo by Jo Yongjun jun21@

According to Joo, the office vacancy rates in major global cities have increased compared to the previous year, reaching high levels. As of the second quarter of 2023, the average office vacancy rate in the United States recorded an all-time high of 16.4%.

In South Korea as well, vacancy rates nationwide, excluding the Gangnam area, are showing an increasing trend. He predicted, "The Gangnam area, where vacancy rates are below the natural vacancy rate, is seeing rental prices rise compared to other regions, so institutional investors will continue to increase investments in downtown offices."

Data centers, which are growing at an average annual rate of 6.7%, were also cited as a key investment sector. The domestic data center market size is expected to expand from 5 trillion won in 2021 to 8 trillion won by 2027. Joo said, "Data centers are being concentrated in the Seoul metropolitan area, where the economy and population are concentrated, accounting for 61% of the total. This concentration in the metropolitan area is likely to continue."

Hotels and resorts were also identified as major investment destinations with profit opportunities. Since COVID-19, the occupancy rate (OCC) of hotels in Seoul has been rapidly recovering after the endemic phase. Regarding the average daily rate (ADR) of hotel rooms in Seoul, five-star and higher luxury hotels are showing rates even higher than before COVID-19.

The co-living market was also presented as a promising investment sector. Co-living refers to a residential form where residents share kitchens, rest areas, and other facilities except for their private spaces within a building. He noted, "The proportion of people in their 20s and 30s among single-person households in Seoul has approached 50%. The co-living market, which offers various convenience facilities not available in existing one- or two-room residences, is expected to continue growing."