In-N-Out Korea 2024. /Courtesy of CBRE Korea

Last year, the scale of foreign capital inflow into the domestic commercial real estate investment market has fully recovered to pre-pandemic levels.

On the 9th, CBRE Korea noted that the scale of foreign capital investment in domestic commercial real estate reached $2.8 billion through 'In and Out Korea 2024.' This is an increase of about 23% compared to the previous year and the largest amount since $2.5 billion in 2019.

In 2023, the United States and Singapore accounted for 44% and 28% of the total inbound investment amount, respectively, maintaining their positions as the top two investor countries, with both countries contributing 84% of the total investment scale last year. The inflow of U.S. capital increased by about 52% compared to the previous year, setting the highest level since 2017. The inflow of Singaporean capital surged by over 35%. China entered the top three for the first time since 2017 by strategically participating in investments for the A-class office, Case Square City, located in the city center.

By asset type, office assets accounted for $1.25 billion (45%), logistics centers for $920 million (33%), and hotels for $510 million (18%). Office assets showed the highest growth rate, increasing by 109% compared to 2023. The trading of core assets in key areas increased. For logistics, value-added investments based on expectations of rising rents at Gimpo Seonggwang Logistics Center and DAEDUCK Logistics Center, as well as the purchase of non-performing loans (NPLs) related to assets with economic loss (EOD), were confirmed.

In particular, investments from foreign capital in hotel assets are increasing. Japanese funds have invested in Conrad Hotel, and U.S.-based Angelo Gordon has acquired Timark Grand Hotel. It is analyzed that the expectation of performance improvement due to the increase in visitors has led to an expansion in investments.

On the other hand, domestic capital investments in foreign commercial real estate amounted to $380 million, a decrease of 48% compared to the previous year, marking the lowest level in history. This conservative approach is largely attributed to increased exchange rate volatility arising from heightened geopolitical risks, as well as the deterioration of existing investment assets. Notably, Europe, which accounted for more than half of outbound investments before the pandemic, showed no new investments from 2023 to last year.

Last year, domestic investors' overseas investment activities were concentrated in Japan and the United States. In Japan, which ranked first in outbound investment scale, purchases of residential and office assets in Tokyo took place, while the United States saw strategic investments made in areas such as New York, California, and Arizona. Unlike past years where investments were concentrated in specific sectors, last year saw a diversification into various sectors, including office, logistics, retail, and residential.

Choi Sook-hee, the head researcher, said, 'Last year's inbound investment has recovered to pre-pandemic levels, and the diversification of asset types and investment destinations is enhancing foreign investors' trust in the domestic market.' However, she noted that 'outbound investment still shows limited signs of recovery, making strategic investment decisions crucial in light of uncertainties in the global market.'

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