Transaction Volume Doubled in a Month and Outlook Remains Positive... Commercial Real Estate Rebounds [Real Estate AtoZ]

"Explosive AI Demand... Capital Inflows Expected to Continue"

Jensen Huang, CEO of NVIDIA, Lee Jae-yong, Chairman of Samsung Electronics, and Chung Eui-sun, Chairman of Hyundai Motor Group, attended NVIDIA's GeForce graphics card (GPU) 25th anniversary event held at COEX in Seoul on the 30th of last month. Photo by Jo Yong-jun

Although the timing of a base interest rate cut continues to be delayed, the commercial real estate market is beginning to show signs of recovery. Typically, investment sentiment revives only after interest rates are lowered and borrowing costs decrease, but in this case, the market is moving ahead of the rate cut. In September, the transaction volume for commercial and office real estate in Seoul doubled within a month, and nationwide transaction volume increased for the second consecutive quarter. Analysts attribute this to the inflow of 'AI money' into AI infrastructure assets such as data centers, which is gradually revitalizing the commercial real estate market.

According to commercial real estate data company RSQUARE Analytics, which analyzed actual transaction data from the Ministry of Land, Infrastructure and Transport on November 8, the transaction volume for commercial and office real estate in Seoul in September reached 2.1519 trillion won, with 193 transactions. Compared to the previous month (1.0211 trillion won and 130 transactions), the transaction amount surged by 2.1 times, while the number of transactions increased by 48%.

Signs of recovery in the commercial real estate market are being observed not only in Seoul but also nationwide. According to real estate specialist Real Estate Planet, the nationwide transaction volume for commercial and office buildings in the third quarter of this year was 11.9809 trillion won, up 14.9% from the previous quarter. The number of transactions was 3,456, a 3.5% decrease from the second quarter, indicating that the recovery is being led by large-scale deals.

Data Centers Rapidly Emerging as a 'New Asset Class' in Commercial Real Estate

Massive capital is flowing in from 'AI money.' Before 2020, there were only one or two such transactions per year, but now, large-scale deals are being closed, especially in the Seoul metropolitan area. In 2018, the 'Dream Mark One Guro IDC' owned by Shinsegae I&C was sold to Dream Mark One for 49 billion won. In 2020, the 'Bundang Hostway IDC' owned by JB Asset Management was sold to Koramco Asset Management. In August last year, the 'Hanam Data Center' (734 billion won), in which Macquarie Korea Infrastructure participated, was sold. In July this year, the 'SK AX Pangyo IDC' (506.8 billion won) was acquired by SK Broadband, and the 'Sejong Telecom Bundang IDC' (31.5 billion won) was acquired by Fine & Partners Asset Management.

According to the recently published '2025 Data Center Report' by RSQUARE Research Center, domestic data center supply has increased by an average of 20.3% per year since 2010. Asset management companies and global investment funds are buying and selling data centers worth hundreds of billions of won in major areas of the Seoul metropolitan region, such as Hanam and Pangyo. Moving beyond the traditional focus on offices and retail, artificial intelligence data centers (AIDC) and edge centers, which combine power, cooling, and network infrastructure, are emerging as a new asset class in the real estate market.

Singapore's Temasek Holdings is seeking to operate 'STT Seoul 1 (Data Center)' in Seoul through STT Global Data Centers (GDC). The UK-based Actis is developing 'Ditto Yangpyeong Center' and 'Epoch Anyang.' US-based Stonepeak Infrastructure Partners is operating SEL1, SEL2, and PUS1 through Digital Edge, while Canada's Brookfield Asset Management, in partnership with DCI, is operating SEL01 and SEL02 (scheduled for completion in 2028). In addition, Hong Kong's Gaw Capital is involved in the Guro and Incheon IDC projects, and US-based Blue Owl Capital is participating in the Bupyeong Data Center project.

NVIDIA and OpenAI Extend Offers of GPU and AI Center Collaboration to Korea

As global AI companies increasingly turn their attention to Korea, this capital inflow is expected to continue for the time being. At the end of last month, Jensen Huang, CEO of NVIDIA, visited Korea to attend the Asia-Pacific Economic Cooperation (APEC) CEO Summit and agreed to supply about 260,000 graphics processing units (GPUs) to the Korean government, Samsung Electronics, SK, and Hyundai Motor Group.

Earlier, Sam Altman, CEO of OpenAI, also visited Korea and signed a letter of intent (LOI) with Samsung Electronics and SK Group for cooperation on AI data centers and semiconductors. President Lee Jaemyung was also present at the meeting and declared, "We will make Korea a global AI hub."

Experts believe that these developments could serve as a catalyst for capital to flow not only into technological cooperation but also into the industrial real estate market, including data centers.

Choi Kyujeong, Senior Researcher at RSQUARE Research Center, stated, "As the volume of data required for AI training and operations is increasing explosively, the demand for servers and data centers to store and manage this data is also expanding rapidly. This increase in demand directly translates into capital inflows, and unless there are significant changes, a wide range of market participants-including end users, operators, asset management firms, and institutional investors-are expected to enter the market one after another, sustaining the current boom."