The office building transaction volume in major districts of Seoul came to 11.5 trillion won ($9.7 billion) for 2019, showing favorable cash flow in the city’s commercial real estate market, data showed Thursday.
The figure comes amid an improved vacancy rate in prime office properties in the central, Gangnam and Yeouido business districts here, coupled with a low interest rate environment.
According to real estate service firm Savills Korea’s research on Seoul prime office properties, the yearly transaction volume in 2019 remained nearly flat, compared to 11.6 trillion won a year prior.
Transactions closed during the October-December period came to 2.2 trillion won.
Major transactions during the quarter include Mastern Asset Management’s 254.9 billion-won acquisition of the NH Investment & Securities headquarters in Yeouido, its 240 billion-won acquisition of the Seoul Building in Gangnam and Koramco Asset Trust’s 255 billion-won purchase of Time Square office buildings in Yeongdeungpo district.
Meanwhile, Seoul’s vacancy rate -- a barometer of stable cash return for investors -- as of the fourth quarter of 2019 came to 8.8 percent, down 1.1 percentage point on-quarter, on the gradual increase in demand from potential tenants. A lower vacancy rate means more room for favorable cash returns.
By district, the vacancy rate in Seoul’s central business district fell 3.2 percentage points quarterly to 13.2 percent in end-2019, while that of the Gangnam business district slipped 0.3 percentage point to 2.2 percent. The figure in Yeouido climbed up 2.7 percentage points to 9.4 percent.
Savills Korea said the upbeat commercial realty market trend is expected to go on, citing ongoing hikes in both demand and supply.
“The office building price will remain on the steady rise in 2020, as the low interest rate continues and expected return falls,” JoAnn Hong, head of research, consultancy and valuation at Savills Korea, said in a statement. “Seoul is also expected to see more properties owned by business groups up for sale.”
The report added that Seoul’s vacancy rate will sharply grow on increased supply from the construction of five prime office buildings in the second half of 2020, including the Parc 1 complex and new Yeouido Post Office building.
By Son Ji-hyoung (email@example.com