Economic growth is expected to weaken further to 2.5% in 2019 as Korea enters the late stage of the upward cycle. Stable leasing demand, paired with new supplies demanding relatively high rents, pushed up rents in 2018 office market, but the growth will be constrained in 2019 by the large volume of new stock scheduled for completion in 2020, despite the lack of new supply in 2019 is expected to ease pressure on vacancy. For the retail sector, although leasing demand along major high streets is set to weaken, retailers retain a healthy appetite for space in office properties, meaning that rents in this segment are likely to increase. Logistic sector will continuously witness strong interest from local and overseas investors in 2019 amid strong leasing demand and the completion of new modern logistics facilities. Korean commercial real estate transaction volume is expected to shrink marginally in 2019 due to higher borrowing costs, tighter regulations, lower returns, and the lack of core properties for sale. CBRE advises investors to consider a range of short-term strategies to take advantage of cyclical fluctuations, and long-term tactics to capitalise on structural market changes.

 

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Economy

Growth expected to weaken


Economic growth is expected to weaken further to 2.5% in 2019 as Korea enters the late stage of the upward cycle.

 

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Capital Markets

Capitalise on structural changes


CBRE advises investors to consider a range of short-term strategies to take advantage of cyclical fluctuations, and long-term tactics to capitalise on structural market changes.

 

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Office

Pressure eases on vacancy


The lack of new supply is expected to ease pressure on vacancy.

 

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Retail

Augmenting retail components


Augmenting retail components in office buildings can both increase asset value and provide a foundation for raising rents.

 

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Logistics

Structural shift supports demand


Strong demand is expected to drive robust leasing and investment activity for cold-chain logistics facilities in 2019 and beyond.

 

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