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  • CBRE Korea releases Seoul MarketView Q2 2018 report – Commercial real estate transaction volume jumps to 3.9 trillion won

CBRE Korea releases Seoul MarketView Q2 2018 report – Commercial real estate transaction volume jumps to 3.9 trillion won

Korea | July 26, 2018
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July 26, 2018 (Seoul, Korea) – CBRE Korea, a global commercial real estate service company, announced that the commercial real estate transaction volume in Seoul reached 3.9 trillion won across a range of asset types, up 38% q-o-q in the second quarter of 2018 according to CBRE Korea’s “Q2 MarketView”. The quarter witnessed the completion of 51 deals, with nine new deals transacted.

Don Lim, Head of Capital Market, CBRE Korea, remarked, "The domestic commercial real estate market gained further momentum in the second quarter following a strong start to the year. It is expected to increase further in the coming quarters with several deals in the pipeline, including Centropolis, Gangnam Finance Plaza, N Tower and the Samsung C&T Seocho Building.”

In the office market, co-working operators continue to expand their presence in the Central Business District, or CBD, with U.S.-based WeWork and local operator FastFive leading the way. In the retail sector, the Hongik University area, or Hongdae, has emerged as a new fashion hotspot and has continued to attract investment in new hotels and shopping malls. In logistics, new supply of modern cold-chain logistics facilities will continue according to CBRE’s market outlook. “The period also saw growing demand for cold chain logistics facilities. This is expected to prompt the development of new facilities and/or redevelopment of older basic refrigerated warehouses into modern cold chain logistics stock”, explained Claire Choi, Head of Research, CBRE Korea.

Office

Average effective Grade A office rents in Seoul increased by 0.6% q-o-q to 21,049 won per sq. m. Notably, in the CBD co-working operator WeWork signed a contract to lease eight floors in Jongro Tower and FastFive signed a leasing contract for three floors in Signature Tower. The average vacancy rate for Seoul Grade A office buildings remained flat despite the new supply of a Grade A property – Luceen Tower (45,847 sq.m GFA) – in the Gangnam Business District, or GBD.

Retail

Gangnam remains a focal point for global brands entering Korea with their first stores open in the area, while Hongdae has carved out a reputation as a new fashion hotspot, driven by lower rents and robust sales. Large companies and investors continue to invest in new hotels and shopping malls in the Hongdae area.

Industrial

Third-party logistics firms continued to drive leasing demand for Grade A logistics space. There was a growing demand for cold chain logistics facilities, driven by the rapid expansion of the fresh food delivery market. Major occupiers are viewed as seeking advanced facilities, which prompts the development of modern cold chain logistics stock. In the coming quarters, large-scale new supply is set to enter around southwest Gyeonggi province, including Bucheon and Ansan.

Investment

The investment market sustained growing momentum following a strong start in the first quarter, with transaction volume increasing by 38% q-o-q to 3.9 trillion won. Due to solid leasing demand in the GBD, the unit prices of some transaction deals were higher than the average in the area, pushing up average capital values and leading to a 0.05%-pt decrease in the average effective yield for Seoul Grade A office assets. Transaction volume is expected to increase further in the coming quarters, with Centropolis, Gangnam Finance Plaza, N Tower and Samsung C&T Seocho Building deals on the way.

Disclaimer:

Neither CBRE nor its affiliated companies make any warranties or claims on the implied accuracy of the information contained herein.

About CBRE Group, Inc.

CBRE Group, Inc. (NYSE:CBRE), a Fortune 500 and S&P 500 company headquartered in Dallas, is the world’s largest commercial real estate services and investment firm (based on 2019 revenue). The company has more than 100,000 employees (excluding affiliates) and serves real estate investors and occupiers through more than 530 offices (excluding affiliates) worldwide. CBRE offers a broad range of integrated services, including facilities, transaction and project management; property management; investment management; appraisal and valuation; property leasing; strategic consulting; property sales; mortgage services and development services. Please visit our website at www.cbre.com.

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Kayla Ryu
Kayla Ryu
Senior Manager
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