Last year, the total transaction volume of domestic commercial real estate reached 22.4 trillion KRW, marking a 27% increase compared to the previous year. This has led to an assessment that the commercial real estate investment market has passed its bottom and entered a recovery phase.
On the 13th, Koramco Asset Management's R&S Office (Research & Strategy) published the '2025 Q1 Commercial Real Estate Market Report: Recovery Amid Uncertainty: Uneven but Rebounding.' The report analyzed the market conditions of offices, logistics centers, data centers, hotels, and more.
Koramco noted in the report that while the increase in transaction volume is welcome, domestic and international uncertainties persist due to the state of emergency and the election of former U.S. President Trump. In a capital market with limited liquidity, investors are selecting investment targets more cautiously than before.
By investment sector, the vacancy rate of Seoul offices rose to 4.9%, up 2 percentage points (P) from the previous year. This was influenced by the supply of new offices in the Magok business district of Seoul. It was evaluated as a good alternative for companies needing to reduce expenses due to relatively lower rental costs compared to other business districts in Seoul.
Although approximately 990,000 pyeong (about 3.27 million square meters), equivalent to 35% of existing office space, was scheduled to be supplied in the Central Business District (CBD) area after 2029, the actual completion date is expected to be delayed by several years due to construction delays.
New supply in the logistics market has clearly shifted to a decline. Concerns about oversupply are expected to decrease going forward. Recently, the cap rate for logistics centers has exceeded 6%. However, investment demand is expected to concentrate on logistics centers with specific specifications preferred by tenants.
The hotel market is improving operational profits due to the recovery of the tourism industry. With global luxury hotel brands entering the domestic market, the report analyzed that qualitative growth of domestic hotels is expected. The domestic hotel investment market is anticipated to continue transactions mainly led by foreign investors for some time.
The data center market is resolving supply uncertainties as recently delayed construction projects are gradually resuming. However, future supply conditions are expected to remain limited due to conflicts with local residents in development areas. Based on this, data centers in Seoul and the metropolitan area are expected to become increasingly scarce and attractive to investors.
Kim Yeolmae, head of Koramco Asset Management's R&S Office, stated, "In the macroeconomic flow, it is a time to consider strategies that select individual assets with high investment value alongside asset allocation strategies." She added, "Going forward, insight to read market trends and the ability to evaluate the intrinsic value of assets will become more important than ever."
© The Asia Business Daily(www.asiae.co.kr). All rights reserved.
