CBRE Korea Reports Commercial Real Estate Transaction Volume to Reach 22 Trillion Won in 2024, Surpassing the Low-Interest Rate Year of 2021; Stability or Slight Increase Anticipated for 2025

- The commercial real estate market in 2024 was driven by office transactions amounting to approximately 13 trillion won.
- With numerous projects entering the market, a robust investment volume is anticipated for 2025 as well.

Seoul, January 24, 2025 – According to the '2025 Korea Commercial Real Estate Market Outlook Report' released by CBRE Korea, the world's largest commercial real estate services company, the transaction volume for the commercial real estate market in 2024 recorded approximately 22 trillion won, exceeding that of 2021, which was characterized by low-interest rates. Additionally, amid ongoing economic and political uncertainties in the country, the transaction volume for 2025 is expected to remain similar to or see a slight increase from that of 2024.

The transaction volume for the commercial real estate market in 2024 surpassed the previous record of 21 trillion won set in 2021, reflecting a rise of about 49% compared to 2023. The office sector accounted for approximately 13 trillion won, representing about 60% of the total transaction volume. The office market showed a high proportion of large deals led by domestic investors, with 32 transactions exceeding 100 billion won, amounting to 11 trillion won out of the total 13 trillion won. Following the office sector, the logistics segment contributed around 5 trillion won, while the hotel and retail sectors each reached about 2 trillion won.

In 2025, the commercial real estate market is anticipated to benefit from expectations of further interest rate cuts and the entry of numerous projects that have been waiting to enter the market. In particular, the office sector is set to see around 45 major transactions either in progress or planned this year, covering approximately 2 million square meters in total area. The logistics market is also expected to maintain investment levels similar to last year, supported by a reduction in supply risks and expanded core asset transactions. In the hotel market, investment interest and growth are also expected to continue as the number of tourists visiting Korea increases, investments aimed at repurposing assets, and asset securitization by large Korean conglomerates.

Looking at the sector-specific outlook for the commercial real estate market in 2025, the office market is expected to face a continued supply shortage in the A-grade office market across Seoul's three major business districts (CBD, GBD, YBD). With supply restrictions in key areas, the emergence of new business districts like Magok, where large-scale rental offices are being supplied in the first half of this year, is anticipated to stand out.

The retail market recorded its first negative growth last year since 2020 during the COVID-19 expansion, and this trend of weaker domestic demand is likely to continue in 2025. However, the influx of foreign tourists is expected to partially offset market risks by revitalizing street retail and medical retail sectors. Traditional shopping areas like Myeongdong have recently seen a decrease in vacancy rates and a slight increase in rental prices, showing signs of recovery, while emerging areas like Seongsu and Yongsan continue to demonstrate strong demand with low vacancy rates and significant rental increases. However, growth disparities based on regional characteristics remain pronounced.

In the logistics market, a significant reduction in supply is expected in 2025, alleviating concerns stemming from the large supply in 2024. The overall vacancy rate, including both ambient and cold storage facilities, is projected to improve from 23% last year to around 19%. Vacancy risks in the logistics market may vary by region. Ansung, now the third-largest logistics market in the metropolitan area, is expected to drive the market more than 30% of the total supply this year.

Claire Choi, Senior Director, Head of Research at CBRE Korea stated, “The year 2025 is expected to be challenging, marked by a dual burden of slowing growth and a contracting job market, alongside a global economic downturn, domestic political uncertainties, and sluggish domestic demand. This year, the commercial real estate market is anticipated to see a recovery in investor sentiment due to expectations of interest rate cuts. However, the disparity in expected prices between sellers and buyers, rising costs, and economic uncertainties will likely necessitate cautious decision-making in investments.”