2025 Korea Real Estate Market Outlook

Economy

Korea's economy is projected to experience another year of slowed growth in 2025, building on the deceleration seen last year. While the Bank of Korea is anticipated to maintain its easing bias with further interest rate cuts this year, the speed and extent of these reductions will hinge heavily on both domestic and global economic developments.

Office

Despite a slowdown in rental growth, the limited supply is expected to continue driving positive growth in Seoul's Grade A office market. Large-scale office supply outside the three major districts such as Magok is expected to promote the movement of market demand.

Retail

This year will see the further spread of value-for-money consumption amid a challenging environment characterised by high inflation and sluggish domestic demand. While market performance continued to diverge, traditional commercial districts have shown signs of recovery, thanks to the rebound in tourism.

Logistics

With a continued increase in supply in 2024, the vacancy rate rose to 23%. While a gradual decrease in vacancy is expected to commence this year, it is likely to take some time for accumulated vacant properties to be fully absorbed.

Investment

A gradual recovery of the commercial real estate market is expected due to interest rate cuts, while volatility is expected to be high due to the macro economy. Cap rate is expected to remain flat, while in the logistics market, the gap in the rate of return is expected to widen depending on the asset.