CBRE Korea Highlights: No. 1 in Asia Pacific for Net Purchase Intentions of Domestic Commercial Real Estate Investors

-Domestic investors rank first in Asia Pacific investor intentions survey with 16% net purchase intentions for 2024
-Expectations of interest rate cuts in the second half of the year and price adjustments across the market fuel optimistic investment outlook

Seoul, April 4, 2024 – In a revealing insight into the commercial real estate market, CBRE's latest ‘2024 Korea Investor Intent Survey Report’ shows domestic investors have the highest net purchase intentions among major countries in Asia-Pacific regions.

This comprehensive survey, which took place in December 2023 and encompassed 510 pivotal investors from across the Asia-Pacific – including 51 from within Korea – sought to gauge the 2024 outlook for real estate investment activities, highlighting major risks, preferred strategies, and sectors. It was domestic investors who stood out, with 16% indicating a net purchase intention, outpacing their counterparts in major markets such as Japan and Singapore, which both recorded an 8% intent.

The survey identified key drivers behind the domestic investment boost: a 31% anticipation of interest rate stabilization and subsequent debt cost reduction; a 28% expectation for reasonable market price adjustments; and a 24% opportunity increase for distressed asset investments. These findings suggest a market ripe for investment, spurred by the prospects of reducing interest burdens and a recalibration of real estate prices.

In particular, more than half of domestic investors, or 54%, showed a preference for office assets, maintaining the highest preference for the third consecutive year. Unlike major overseas office markets, the low vacancy rate and rental increase in Seoul's Grade A offices are driving this trend. Domestic investor preferences were followed by logistics centers at 26% and data centers at 8%. Logistics centers are the most favored asset among investors in the Asia Pacific region, with foreign capital investing in 43% of the transactions in the domestic metropolitan area last year. Data centers are attracting attention as a new investment asset in commercial real estate due to the growth of the AI industry. 

Claire Choi, Senior Director, Head of Research at CBRE Korea, emphasized, "With over half of Korea's commercial real estate investors poised to ramp up their investments this year, navigating anticipated price discrepancies between sellers and buyers, alongside mitigating refinancing risks due to asset value shifts, will be crucial, especially in light of forthcoming interest rate cuts."

Adding to this, Sean Choi, Executive Director, Head of Capital Markets at CBRE Korea, projected, "Heightened expectations for a downward adjustment in interest rates by the year's end hint at a gradual rejuvenation of the commercial real estate market. An expansion in market liquidity could modestly elevate investment volumes over the previous year. The market’s recovery trajectory is likely to be bolstered by the fruition of significant ongoing or planned transactions, coupled with vigorous acquisition competition among both domestic and international investors."