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Seoul office building transactions at record high in 2020

By Jan 26, 2021 (Gmt+09:00)

Seoul office building transactions at record high in 2020

Brisk investment demand drove office building prices higher in Seoul and its southern neighboring area last year, with their combined transaction value surging to an all-time high, despite a rise in their vacancy rate.

Search for steady income in the ultra-low rate environment is expected to continue to spur demand for office buildings which proved more resilient than retail properties and hotels in the pandemic era, generating an annual return of 3-4%.

Office building transactions in Seoul and the affluent district Bundang south of the capital city reached a historic high of 13.4 trillion won ($12.1 billion) last year, up 8.9% from a year earlier, according to real estate services firm Cushman & Wakefield.

The full-year tally of 13.4 trillion won was the largest amount since the 12.3 trillion won hit in 2019, and marked a third consecutive year where office transaction value combined in the capital areas topped 10 trillion won since 2018.
The average selling price climbed by 8.6% to 25.7 million won per 3.3 square meters, compared with 2019, with landmark buildings both north and south of the Han River hitting record-high prices. The 3.3 square meters is equal to one pyeong, a measure of area in Korea.

In comparison, the vacancy rate of A-grade office buildings, with a floor area of 33,000 square meters or larger, rose to 9.2% on average in the third quarter of last year, versus 4.1% three months before, data from Cushman & Wakefield shows.

But analysts attributed the vacancy rate hike in large part to the construction of new large office buildings.

In the October-December quarter, the vacancy rate edged down to 8.5%, supported by demand for shared office or new space in which employees were scattered in the pandemic situation. Additionally, office demand rose from e-commerce and fintech companies, key beneficiaries of the contactless trend.

“Commercial buildings in areas like Itaewon are emptying out because of the COVID-19 impact, but companies in sound financial conditions won’t dump their office space,” said Cushman & Wakefiled Korea’s research head Jin Wonchang. “Also, there is a demand to move to a new building equipped with great disinfection technology.”

Itaewon is a commercial district in central Seoul.

According to Real Capital Analytics, a real estate research house, Seoul was ranked the third most preferred city for cross-border investment for Asia-Pacific property investors in 2020, up by three notches from last year.

Write to A-Young Yoon at

Yeonhee Kim edited this article.

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