CBRE Korea Reports Q3 2024 Commercial Real Estate Investment Volume at KRW 6.6 Trillion, the Highest Since Q1 2022

- The cumulative transaction volume through Q3 2024 reached approximately KRW 15.5 trillion, exceeding the total volume for 2023.
- Office transactions, constituting 57% of total activity in Q3, amounted to approximately KRW 3.8 trillion, propelling market growth.

October 24, 2024 (Seoul) – According to the ‘Seoul Figures Q3 2024 Report’ released by CBRE Korea, the world's largest commercial real estate services company, the commercial real estate investment volume for Q3 2024 recorded KRW 6.6 trillion, reflecting a 43% increase from the previous quarter.

This figure represents the highest quarterly transaction volume for commercial real estate since Q1 2022. Furthermore, the cumulative volume through Q3 2024 has reached approximately KRW 15.5 trillion, surpassing the total for 2023, which was recorded at KRW 14.8 trillion. The commercial real estate investment market is projected to approach KRW 20 trillion by the end of Q4 this year.

In Q3 2024, office transactions accounted for 57% of the overall market activity, totaling around KRW 3.8 trillion and significantly driving market expansion. Following this, logistics transactions were reported at approximately KRW 1.9 trillion, with retail at KRW 479.7 billion and hotel transactions at KRW 459 billion.

The office sector in Q3 experienced a shift, with the influence of strategic investors being notably limited, while domestic investors actively engaged in investment activities. Key transactions included Samsung SRA Asset Management's acquisition of The Asset Building in the Gangnam area for KRW 1.1 trillion, and CapitaLand Investment’s purchase of Golden Tower for KRW 441 billion. Additionally, Shinhan REIT Management’s acquisition of Citi Square in the downtown area contributed significantly to the increase in transaction volume, with core deals totaling KRW 1.9 trillion. Conversely, special transactions, such as the REITs securitization of Hana Financial Group Gangnam Building and Hanwha Janggyo Building, accounted for approximately 29% of the Q3 office transaction volume, indicating that the recovery trend, excluding inter-company special transactions, appears somewhat constrained.

The logistics market demonstrated a transaction volume exceeding KRW 1.3 trillion from the previous quarter, reflecting an increase of more than 45%. The BRIC Hwaseong Logistics Centre was identified as the sole core asset transaction for this quarter, acquired by LB Asset Management in collaboration with Swiss-based Partners Group. Furthermore, pre-purchase investments in newly supplied assets, such as JB Asset Management's GREENWAVE Siwha Logistics Centre, comprised about 60% of the logistics investment market in Q3. A total of five new Grade A logistics facilities, covering approximately 633,323 square meters, were introduced across various regions during Q3; however, the area under pre-lease contracts constituted only around 5% of the total, indicating a deceleration in leasing activity compared to the first half of the year.

In the retail sector, the recovery of foreign tourist arrivals, reaching approximately 10.67 million as of August this year—equivalent to 93% of the same period in 2019, just prior to the pandemic—has positively impacted various offline retail formats. Notably, the expansion of medical retail has been pronounced, with an increase in new openings in traditional commercial districts such as Gangnam, Myeongdong, and Hongdae. The beauty sector is also experiencing growth, driven by the influx of foreign tourists, particularly in major transit hubs. Most of Seoul’s major high streets, including Dosan-daero, Hannam, and Seongsu, have exhibited stable vacancy rates and rental levels.

Claire Choi, Senior Director, Head of Research at CBRE Korea, remarked, “The increase in transaction volume within the office market, which has been a catalyst for the commercial real estate sector in Q3, could be viewed as an indicator of robust market recovery. However, considering the prevailing economic uncertainties, liquidity constraints stemming from interest rate fluctuations, and potential PF risks, a full market recovery is anticipated to be protracted. Nevertheless, the recovery observed in the commercial real estate market this year represent a positive turning point for the domestic investment landscape.”