Report | Intelligent Investment
Understanding Korea real estate liquidity flows and cap rates
October 10, 2023 10 Minute Read
• The opening months of 2023 saw investment volume fall sharply as the impact of last year’s rate hikes finally kicked in. This was followed by a slight uptick in purchasing activity in the second quarter due to the easing of monetary tightening measures and an increase in properties made available for sale.
• As of October 2023, Korea’s commercial real estate investment market remains subdued, however, with signs of recovery remaining elusive. Any improvement to investment sentiment will depend on whether limited liquidity and the gap in price expectations between sellers and buyers brings about an adjustment in asset values and yields.
• Headwinds including pressure on borrowing costs exceeding the rate of return; concerns about low economic growth; poor overseas real estate investment performance; and changes in government policy ahead of next year's by-elections will continue to weigh on short-term decision-making.
• This report is based on CBRE’s recent Cap Rate Survey and examines the risk factors currently impacting the Korean commercial real estate investment market. It also presents an integrated outlook for future changes in asset values and yields.