As large office pre-purchases and asset transactions have increased, the scale of commercial real estate investment in the first quarter of this year surpassed 7 trillion won.
According to CBRE Korea, the world's largest real estate services corporation, the commercial real estate investment market in the first quarter of this year recorded 7.0533 trillion won, an increase of 66% compared to the same period last year and 34% compared to the previous quarter.
CBRE Korea noted that "the completion of large office pre-purchase transactions in the Magok area and the increase in purchasing activities by foreign investors drove the growth in asset transactions."
The scale of office transactions in the first quarter was 5.201 trillion won, accounting for 74% of total transactions. Of this, 2.869 trillion won, which accounts for 55% of office transactions, was made due to the completion of the pre-purchase of Won Grove (CP4) and Le West City Tower (CP1) in the Magok area.
In addition, major transactions in downtown areas, including Namsan Square, Crystal Square, and Jeongan Building, and in the Gangnam area, such as Gangnam Finance Plaza, accounted for approximately 23% totaling 1.1948 trillion won.
On the other hand, the vacancy rate in the prime office market in Seoul remained steady at an average of 2.6%. The vacancy rate in the Gangnam area dropped to 2.1% due to demand from IT and financial corporations such as Coupang, Toss Income, and Viva Republica. The vacancy rate in the Yeouido area decreased to 3.0% with the occupancy of our bank's Park One. Meanwhile, the vacancy rate in downtown areas slightly rose to 2.7% due to the supply of new assets near Euljiro.
The average monthly effective rent showed a modest increase of 1.2% compared to the previous quarter, reaching 36,488 won per square meter, while the nominal rent rose 1.5% to 38,709 won per square meter.
The scale of logistics transactions was approximately 1.4478 trillion won, with foreign capital accounting for about 64%, highlighting the prominence of foreign investors. Canadian corporation Brookfield Asset Management acquired the Incheon S&K complex logistics center, which faced a loss of entitlement (EOD), for about 245 billion won. Koramco REITs Management and Trust also purchased the Incheon Hangdong Dream Logistics Center for about 230 billion won together with the Government of Singapore Investment Corporation (GIC).
The vacancy rate in the A-grade logistics market in the metropolitan area is estimated to be about 22%, down 1 percentage point compared to the end of last year, while the vacancy rates for ambient and cold storage are estimated to be around 16% and 40%, respectively. CBRE explained that "a gradual decline in vacancy rates is expected along with a reduction in supply, but it may take some time for stabilization."
The scale of retail transactions is approximately 234.5 billion won, with notable investment activity centered on small to medium-sized assets, while leasing cases of Chinese brands are also prominent. IT corporation Xiaomi is set to open its first official offline store, "Mi Store," in the Yeouido IFC Mall, and automobile manufacturer BYD has commenced the domestic delivery of its electric SUV, "Atto 3." Brands like Relax, known for electronic cigarettes, and MINISO, an outlet for daily necessities, are also preparing to enter the domestic market.
Choi Soo-hye, Executive Director of Research at CBRE Korea, analyzed that "the commercial real estate market in the first quarter continued to show solid momentum due to pre-purchases of offices and the influx of global investors into logistics assets," and said, "Demand for value-add investments centered around foreign investors and core-plus fund investments is expected to remain high going forward."