CBRE Korea Forecasts Office Transactions to Hit KRW10 Trillion, Fuelling Investment Market Expansion

-High-interest rates prompt the sale of office assets to bolster refinancing and alleviate cash flow constraints
-Anticipated decrease in global interest rates and increased investment liquidity set to invigorate commercial property investments

January 31, 2024 (Seoul) – CBRE, a global commercial real estate services company, held a webinar titled '2024 Korea Real Estate Market Outlook' on January 30. CBRE Korea has forecasted that Korea office market transactions for this year will reach KRW 10 trillion, driving the overall domestic commercial real estate investment market.

At this event, presentations were conducted to provide insights into the global, European, and Asia-Pacific (APAC) commercial real estate outlook, as well as the domestic commercial real estate market outlook, segmented into office, retail, logistics, and investment markets.

"Even though the global market in 2024 isn't without risks, including a potential economic recession and slowdown, the possibility of interest rate cuts in several countries offers a silver lining for a revival in the property investment market," remarked Richard Barkham, Global and North America Head of Research at CBRE. He also noted that the anticipated repricing of the European property market could spur transactions, while the expected recovery in the Asia-Pacific region and the presence of substantial dry powder (uninvested funds) could generate more investment opportunities.

Soo Hye Choi, Executive Director of Research at CBRE Korea, while presenting the domestic market outlook, mentioned, "High-interest rates have made refinancing challenging, prompting many investors to sell their office assets to improve their cash flow, which has been strained by PF risks and a deteriorating stock market." She added, "The office market could spearhead the commercial property investment market this year, contingent on the successful completion of several ongoing regional deals."

Subsequently, Sean Choi, Head of Capital Markets, Executive Director at CBRE Korea, Hyo-gun Kim, Partner at Samil Accounting, Won-jong Kim, Head at Korea Asset Trust, and Si-woo Park, Representative at CBRE HYUN Appraisal Corporation, discussed strategies and outlooks for the non-performing loan (NPL) and project financing (PF) markets under the theme 'Opportunities in Distressed Asset' amidst global economic uncertainty.

"Despite the challenges posed by the continued high-interest rate environment and economic slowdown, we anticipate a gradual recovery in the investment market, spurred by expected interest rate cuts by central banks in the US and other countries in the second half of this year, and increased liquidity in the investment market due to repricing in the European market," stated Dongsoo Lim, Managing Director of CBRE Korea.

He added, "We also expect positive changes in the domestic market, bolstered by a robust office market, a recovering retail sector, the gradually stabilizing 3PL industry, and demand for Grade A logistics market. CBRE remains committed to being the most trusted partner for our clients across all sectors of the real estate business, identifying opportunities in uncertainty and delivering exceptional service to enhance the value of their assets."