CBRE Korea Reports Q4 2024 Commercial Real Estate Market Remains Robust at KRW 5.268 trillion amid Internal and External Uncertainties

-Office transactions in Q4 2024 reach approximately 4.352 trillion won, constituting 83% of total market activity.
-Stable growth is sustained by limited supply of Grade A offices in Seoul's key districts and a strong preference for prime assets.

February 20, 2025 (Seoul) – According to the ‘Seoul Figures Q4 2024 Report’ released by CBRE Korea, the world's largest commercial real estate services company, the commercial real estate market remained robust in Q4 2024, with an investment market volume of KRW 5.268 trillion, driven by a stable office market amidst internal and external uncertainties.

The quarter saw office transactions amounting to approximately 4.352 trillion won, which accounted for 83% of total market transactions, underscoring the sector's pivotal role in driving market performance. Noteworthy transactions included the acquisition of D Tower Donuimun by NH Nonghyup REITs and the Jeongdong Building, backed by U.S. investors, alongside the NH Nonghyup Capital Building in the Yeouido area. These core asset transactions significantly contributed to the overall increase in transaction volume. Additionally, various transactions such as the office and data center complex Koreit Tower, acquired by Korea Land Trust via a preemptive right, and Centerpoint Gangnam, purchased by F&F from Mastern Investment Management, as well as the K Square Magok (CP3-2) by Koramco Asset Trust, led the office investment market.

In Q4, the office market continued to show stability in vacancy rates and rental prices. The vacancy rate for Grade A offices in Seoul decreased by approximately 0.3 percentage points from the previous quarter to 2.4%, marking a slight downturn after a gradual increase since Q1. Nominal rental prices rose by 1.9% from the previous quarter to 38,119 won per square meter, reflecting anticipated increases in 2025 for some assets, while real rental prices also rose by about 1.8%, reaching 36,045 won per square meter.

The logistics market saw transaction volumes of about 374.7 billion won, with transactions of Grade A core assets accounting for 71% of the total, contrasting with the previous quarter, which was dominated by preemptive purchases and NPL-related transactions. This quarter, a total of 10 new Grade A assets were supplied, covering an area of 1,165,274 square meters, with approximately 54% concentrated in the western region, including the Incheon Dohwa Logistics Center and the Logispoint Gimpo SMART Logistics Center. The vacancy rate in the Greater Seoul Area's Grade A logistics market increased by 2.3 percentage points compared to the first half of the year, reaching approximately 23%, with ambient and cold storage rates recorded at 17% and 41%, respectively.

The retail sector recorded a transaction volume of about 421.7 billion won, primarily consisting of transactions between corporate and individual owners of small and medium-sized assets. Despite expectations for domestic growth following two rate cuts in Q4, negative factors such as a surge in the exchange rate due to the December emergency martial law, a decrease in foreign tourists, and weakened consumer sentiment led to a 1.3% decrease in sales compared to the same period last year. However, the number of foreign tourists in 2024 recovered to 94% of the pre-COVID-19 levels of 2019, suggesting potential growth in 2025. 

Conversely, the hotel market showed a transaction volume of about 120 billion won, buoyed by significant deals including the Dears Myeongdong Hotel and L7 Gangnam. As foreign tourist numbers recover and multiple hotel transactions are underway, the outlook for future transaction volumes remains optimistic.

Claire Choi, Senior Director, Head of Research at CBRE Korea, commented, “The Q4 commercial real estate market has navigated through a landscape of risks, including domestic and international political issues, economic downturn forecasts, and sluggish domestic demand. Yet, it has been supported by positive factors such as two interest rate cuts and a series of successful transactions throughout the year, including preemptive purchases of large office assets, contributing to a solid investment scale.” She further noted, “Looking ahead to 2025, we anticipate the commercial real estate market to maintain its solid trajectory, albeit with potential price expectation imbalances between sellers and buyers and volatility influenced by asset characteristics.”