Knowledge Industry Centers Unable to Escape Slump... Transaction Volume and Amount Both Decline

Real Estate Planet Analysis Results Announcement
Q2 Nationwide Knowledge Industry Center Transaction Volume and Amount
Both Declined Compared to Previous Quarter... No Upward Trend

Both the Seoul metropolitan area and non-metropolitan areas are experiencing declines in the volume and value of knowledge industry center sales transactions nationwide. On the 18th, Real Estate Planet, a proptech company specializing in commercial real estate, announced that the analysis of nationwide knowledge industry center sales transaction data for the second quarter of this year showed such trends.

The analysis covered 1,356 knowledge industry centers nationwide as of the end of June, with confirmed addresses and construction status. The Seoul metropolitan area accounted for 81.9% (1,111 centers), and non-metropolitan areas accounted for 18.1% (245 centers).

In the second quarter of this year, there were a total of 913 knowledge industry center transactions nationwide, which is an 8.2% decrease compared to the previous quarter (995 transactions) and a 6.2% decrease compared to the same period last year (973 transactions).

Knowledge industry centers, which were once spotlighted as a new investment destination in the real estate market, recorded an average quarterly transaction volume of about 2,000 until 2021. However, from the third quarter of 2022 (973 transactions) through the second quarter of this year, the transaction volume has stagnated around the 1,000 mark.

Looking at transaction values also reveals a clear downward trend. The total transaction value of knowledge industry centers nationwide in the second quarter of this year was 367.6 billion KRW, down 13.1% from 423 billion KRW in the first quarter. Compared to the second quarter of last year (413.7 billion KRW), it fell by 11.1%.

The average price per pyeong (3.3 square meters) of exclusive area for knowledge industry centers nationwide in the second quarter was 15.72 million KRW. This represents a 6% decrease from 16.73 million KRW in the previous quarter and a 5.3% drop from 16.6 million KRW in the same period last year.

The trend of the Seoul metropolitan area, where knowledge industry center transactions are concentrated, also reflects the nationwide market downturn.

In the second quarter, there were 834 knowledge industry center transactions in the Seoul metropolitan area, with a total transaction value of 341.3 billion KRW. Compared to the first quarter (895 transactions, 392.9 billion KRW), these figures represent decreases of 6.8% and 13.1%, respectively. Compared to the same period last year (865 transactions, 378.9 billion KRW), they fell by 3.6% and 9.9%, respectively.

The non-metropolitan areas also showed a concurrent downward trend with the Seoul metropolitan area. Both transaction volume and value decreased compared to the previous quarter, with transaction volume dropping 21% from 100 to 79 transactions, and transaction value falling 13% from 30.1 billion KRW to 26.2 billion KRW. Compared to the same period last year (108 transactions, 34.8 billion KRW), these represent decreases of 26.9% and 24.7%, respectively.

In Seoul, 201 knowledge industry center transactions were recorded in the second quarter, with a transaction value of 134.4 billion KRW. These figures represent decreases of 13.4% and 16.1%, respectively, compared to the previous quarter. However, considering that transaction volumes had remained in the 100s from the third quarter of 2022 (130 transactions) through the fourth quarter of last year (168 transactions), it appears that the market has bottomed out. The average price per pyeong of exclusive area in Seoul in the second quarter was 23.74 million KRW, down 18.3% from 29.05 million KRW in the first quarter.

By district, Geumcheon-gu recorded the highest number of transactions (87), followed by Yeongdeungpo-gu (37), Guro-gu (25), Songpa-gu (22), and Seongdong-gu (17). In terms of transaction value, Geumcheon-gu led with 48.1 billion KRW, followed by Yeongdeungpo-gu (29.1 billion KRW), Songpa-gu (18.6 billion KRW), Seongdong-gu (16.3 billion KRW), and Guro-gu (14.4 billion KRW).

The knowledge industry center market in Gyeonggi-do showed a similar pattern. The transaction volume in the second quarter decreased by about 5.3% from 590 in the previous quarter to 559, and the transaction value dropped 12.3% from 210.3 billion KRW to 184.5 billion KRW. However, unlike Seoul, Gyeonggi-do saw a 3.2% increase in the average price per pyeong of exclusive area, rising from 13.83 million KRW in the previous quarter to 14.27 million KRW.

Among cities and counties, Anyang-si had the highest number of transactions in the second quarter with 64. It was followed by Hanam-si (51), Seongnam-si (47), Pyeongtaek-si (43), and Siheung-si (42). In terms of transaction value, Anyang-si led with 23.1 billion KRW, followed by Seongnam-si (20 billion KRW), Yongin-si (18.1 billion KRW), Hanam-si (14.3 billion KRW), and Suwon-si (12.2 billion KRW).

Jung Soo-min, CEO of Real Estate Planet, said, "In the second quarter of this year, the nationwide knowledge industry center market showed a general decline in both transaction volume and value in both the Seoul metropolitan area and non-metropolitan areas." He added, "This is the result of a complex interplay of factors including high loan interest rates, oversupply beyond actual demand, as well as recent changes in the corporate environment and overall real estate market trends." He continued, "While transactions may occur in some areas with excellent location conditions, it is unlikely that the market will recover in the short term unless market imbalances and economic conditions improve."