Mastern buys Pangyo office landmarks for $834 mn

Mastern Investment Management Co., a Seoul-based real estate investment firm, has acquired Alpharium Tower I and II in Pangyo from ARA Asset Management Korea for around 1 trillion won ($833.5 million). The sale price was 9.1 million won ($7,584) per square meter, the highest-ever office price per unit area in Pangyo, the so-called Silicon Valley of South Korea.

ARA Korea, the Korean branch of Singaporean investment firm ARA Asset Management Ltd., bought the property in 2017 and completed the sale on Jan. 24. Jones Lang LaSalle Inc. and CBRE Group Inc. were the financial advisors for the sale, JLL said on Feb. 7.    

Constructed in November 2015, Alpharium Tower I and II are the landmark office buildings in Pangyo. The buildings have 13 floors above ground and three underground with a combined floor area of 112,254 square meters. The buildings' rental rate reaches 95%, including Korean leading game developer NCSoft Corp. and IT company Samsung SDS Co., which together use around 80% of the rentable floor area. 
  
“Amid fierce competition to buy core assets, the sale was a rare prime office investment opportunity in the commercial area of Pangyo,” said Chang Chae-hun, the country head of JLL Korea. “We expect high demand for office space and soaring values of assets in Pangyo, as well as the continuing growth of the information technology industry in Korea,” Chang added.    

Office real estate market in Pangyo, as well as in Seoul, is bullish thanks to increased liquidity due to persistently low-interest rates. IT companies’ demand for grade-A offices in Pangyo has been growing, with lower than 1% vacancy rates since 2017, JLL said.

Effective rent in Pangyo sharply increases when supplying new offices or renewing rental contracts, and the vacancy rate of the area will remain low due to limited office supply in the Gangnam neighborhood of Seoul, JLL stated.

Meanwhile, grade-A office transactions in Seoul hit a record high of 17.1 trillion won ($14.3 billion) in 2021, breaking the 16.6 trillion won record set in 2020, JLL said in its report last week. In the fourth quarter of 2021, the average monthly rent for grade-A offices in Seoul reached 30,424 won per square meter, the highest ever.

Write to A-young Yoon at youngmoney@hankyung.com
Jihyun Kim edited this article.