The total transaction size of domestic commercial real estate last year reached 22.4 trillion won, a 27% increase from the previous year. The commercial real estate investment market is said to have passed its low point and entered a recovery phase.
Koramco Asset Management announced that its Research & Strategy team published the '2025 1st Quarter Commercial Real Estate Market Report: Recovery Amid Uncertainty' on the 13th. The report includes market analyses by sector, such as offices, logistics centers, data centers, and hotels.
Koramco noted that while the increase in transaction size is welcome, domestic and international uncertainties are ongoing due to the state of emergency and the election of U.S. President Trump. In the current situation of insufficient liquidity in the capital market, investors are said to be more cautious in selecting investment opportunities than in the past.
In the investment sector, the vacancy rate for Seoul offices rose to 4.9%, an increase of 2% from the previous year. This rise is influenced by the newly supplied offices in the Magok Business District, which are assessed to be a good alternative for corporations needing to reduce expenses due to relatively lower rental costs compared to other business districts in Seoul.
Additionally, about 990,000 pyong of new office space, which accounts for 35% of existing office space in the Central Business District (CBD), was expected to be supplied after 2029; however, the actual completion date is forecasted to be delayed by several years due to construction delays.
It was reported that the new supply in the logistics market has definitively transitioned to a declining trend. As a result, concerns about oversupply are expected to decrease in the future. Recently, the cap rate for logistics centers has exceeded 6%. However, it is projected that investment demand will focus on logistics centers with specific specifications preferred by lessees.
The hotel market was found to have improved operating revenue due to the recovery of the tourism industry. In particular, the anticipated entry of global luxury hotel brands into the domestic market is seen as a point of qualitative growth for domestic hotels. For a while, it is expected that the domestic hotel investment market will continue to see transactions centered around foreign investors.
Moreover, the report analyzed that the data center market is seeing a resolution of supply uncertainties as construction delays are beginning to resume. However, due to conflicts with residents in development areas, future supply conditions are expected to remain limited. Based on this, the scarcity of data centers in Seoul and the surrounding metropolitan area is expected to become more pronounced for investors.
Kim Yeolmae, head of the Research & Strategy team at Koramco Asset Management, said, "Now is the time to consider strategies for selecting individual assets with high investment value along with asset allocation strategies in the macroeconomic flow," adding, "In the future, the ability to read market trends and assess the intrinsic value of assets will be more important than ever."