Pfizer Korea HQ sale falls through on investors' tepid interest

South Korea’s GRE Partners Asset Management Co. a real estate investment firm, has recently suspended the selling process for Pfizer Pharmaceuticals Korea Ltd. headquarters. GRE, which started the sale process in May and chose Jones Lang LaSalle Korea as a lead manager last month, saw the bid-ask spread as too wide, market insiders said.

The so-called Pfizer Tower is located in Myeong-dong in Seoul's Central Business District (CBD). The office tower has 15 stories above ground and four underground with a gross floor area of 15,868 square meters. It was built on land measuring 1,887 square meters in 1984.  

Pfizer purchased the tower for 58.1 billion won ($44.2 million) in 2006 and used the property from 2007 to 2020. Two years ago, the pharmaceutical giant sold the tower for 112 billion won to GRE Partners’ private equity fund but has continued to rent the premises. Pfizer Korea is scheduled to terminate the rental contract on November 30 and move to nearby State Tower Namsan.

GRE Partners had expected high demand for the tower amid the shortage of CBD-based offices and was planning to maximize the property’s value via remodeling, real estate industry sources said.

JLL Korea held a bid for the sale last month with potential buyers, tenants and real estate developers. However, the real estate manager saw tepid interest from bid participants due to the interest rate hikes.

Transactions in Seoul's commercial real estate market have reduced – the sum of the market transactions during the first half of 2022 is estimated to have reached 14 trillion won, about 27.4% down from the same period of 2021, online property platform RSquare said last week.   

The city's commercial real estate market increased last year as many central banks provided substantial liquidity. Aggregate transactions in the market reached 9.8 trillion won in the first half of 2020, soared to 19.2 trillion won in the first half of 2021 then slightly dropped to 15.9 trillion won in the second half of 2021. Annual transactions in 2021 jumped by 30.8% from the previous year.   

Write to Tae-Ho Lee at thlee@hankyung.com
Jihyun Kim edited this article.