The commercial property market in South Korea is showing great potential due to a range of factors.
Interest in South Korea’s commercial property market is on the up, as investors are attracted by comparatively high investment yields, low volatility and undervalued prime office space.
The increased attention from overseas buyers has seen the value of commercial property transactions rise to $12bn in 2016. This is something of a record for the South Korean commercial market, and the figure is has increased 15% from the previous year.
In terms of transaction volume, Seoul has seen an impressive rise of 140% year-on-year. It is believed that overseas investors were involved in over half of South Korea’s commercial property transactions during 2016.
Callum Young, director at investment advisory Savills Korea, comments:
“The yields on offer here are some of the highest in any stable economy and appeal to both institutional and private investors alike.”
According to Savills Korea, investment yields on office buildings in central Seoul were around 5% in Q4, a figure which came in higher than Beijing’s 4.3%, Tokyo’s 3.2%, Singapore’s 3.3% and Hong Kong’s 3%.
“Korea has higher yields than Tokyo or Singapore and has a preferable ownership system when compared to China,” explained Steven Craig, managing director at JLL Korea, the property services group.
Experts believe that the South Korean commercial market is currently undervalued, and they expect a range of attractive new opportunities to come available shortly as local firms restructuring in the face of an economic slowdown seek to sell assets.
