Report

2024 Korea Real Estate Market Outlook

January 31, 2024 15 Minute Read

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Office

 

Limited availability of leasable space despite a slight recovery in supply this year, excluding owner-occupied assets and pre-leased areas

Landlord-favored market conditions to continue, leading to intensified competition and rent increases

Tenants to consider renewal options and renegotiating contracts, resulting in decrease in new lease volume

Supply expected to recover from 2026 onwards, with a significant number of development projects underway in east CBD

 

Retail

 

Offline consumption to rebound, centered on commercial districts with differentiated content and strong customer attraction, alongside the O4O (Online for Offline) strategies

Beauty and K-fashion sectors expected to show the fastest recovery, contributing to additional vacancy recovery in major street shopping districts, including Myeongdong

Consumer polarization to deepen, with both value-for-money consumption and demand for premium brands persisting

 

Logistics

 

Vacancy rate in the grade A logistics center in Greater Seoul market increased to around 19% due to record-breaking supply in 2023

Further increase in vacancy rate expected with additional supply this year

E-commerce and 3PL sectors to remain key demand drivers, despite short-term supply concentration requiring time for stabilization of new assets

Limited rent increase this year due to short-term vacancy risk, with variations based on market, location, asset type, and quality

 

Investment

 

Seoul commercial real estate investment volume expected to show a slight recovery in 2024, with investment recovery centered on the office sector

Expected interest rate cuts in the second half could support potential investment activity, despite lingering high rates and limited liquidity in the short term

Corporate (SI) investors to emerge as major capital sources, increasing investment cases for office acquisition

Cap rates to continue a slight upward trend, with the spread in cap rates by region in the office market expected to gradually decrease

Logistics sector to experience a larger variation in cap rates