
South Korea has become the second-largest market for office investments in the Asia-Pacific region after Japan, according to a recent report by market tracker Savills.
In the first three quarters of this year, Japan saw the largest transaction volume in office property, making up 30 percent of the total, while Korea ranked second with 22 percent. Other markets included China (18 percent), Australia (12 percent), India (6 percent) and Hong Kong and Singapore with 5 percent and 4 percent, respectively.
In year-on-year growth in investment volume, Korea outpaced Japan with an 18 percent increase compared to Japan's 16 percent. The report attributed the increase in both countries to factors including lower vacancy rates and limited future supplies.
Unlike Korea and Japan, China's office market momentum weakened due to the nation's struggling economy and high debt levels.
Savills, however, projected that vacancy rates in Korea’s office markets would rise starting in late 2026 when several large-scale building projects and city-wide redevelopments are set to be completed.
As of October this year, office property transactions in the Asia-Pacific market made up 34 percent of overall real estate transactions, tying with the industrial sector for the highest share. This contrasts global trends, where residential leads with 28 percent of transactions, followed by industrial with 24 percent and office with 23 percent.
The contrast is starker when compared to the US market, where office transactions have dwindled to just 16 percent of the total. The report cited "the structural challenges posed by the hybrid working model" as a key factor in the US's declining interest.
Unlike global markets, the report highlighted that the appeal of the Asia-Pacific market lies in sustained investor interest, driven by ample liquidity and plenty of investment-grade assets.