This article was posted on the ChosunBiz MoneyMove (MM) site at 11:36 a.m. on Sept. 22, 2025.
Recently, large listings in Korea's commercial real estate market have seen sluggish transactions. There had been strong expectations that commercial real estate would hit bottom and rebound, but sellers and buyers have failed to close the gap in price expectations, and there have been consecutive cases of withdrawals or postponements of sales.
According to the investment banking (IB) industry, selection of the preferred bidder for the sale of Seoul Square near Seoul Station — considered a big ticket in the office building market in the second half of this year with a price tag mentioned in the 1 trillion won range — is being delayed. Capstone Asset Management and Korea Investment Real Asset participated in the bidding held at the end of last month, but seller ARA Korea Asset Management asked for a higher price and requested another offer. The bidders submitted revised prices, and the seller and the underwriter are coordinating based on those. Earlier, ARA Asset Management acquired Seoul Square from NH Investment & Securities in March 2019 for 988,280,400,000 won.
Brookfield Asset Management, which has struggled for years to sell IFC Seoul, has ultimately halted the process and decided to set up a new fund to transfer the assets. Brookfield invested about 2.55 trillion won in 2016 to buy five IFC office assets from U.S. AIG. At the time the vacancy rate was high and its standing was lower than now, and Brookfield formed an opportunistic fund with a high target return known to be around 20% annually. Sale efforts intensified from the second half of 2021, but Brookfield held to a price in the 4 trillion won range and could not narrow the gap with bidders proposing lower prices.
KT&G's Euljiro Tower in Jung District, Seoul, which KT&G offered to divest as a noncore asset, also struggled to progress because of differences in desired prices between seller and bidders, but recently signed a deal worth 120 billion won with Cheongkyung Shipping. KT&G had not been able to select a preferred bidder since holding a bidding in May.
There have also been cases where sales stalled because of difficulties in financing even after sellers and bidders agreed on price. Doosan Tower, the Dongdaemun landmark office that drew attention with a valuation close to 1 trillion won, failed to close the deal after its previous preferred bidder, Korea Investment & Securities, struggled to recruit investors.
In addition, IGIS Asset Management withdrew the sale of Lotte Department Store's Bundang branch and decided instead to proceed with direct remodeling work. IGIS participated in the bidding at the end of July and conducted interviews with bidders including IGIS X Asset Management, Capital Land Investment Management, and Brighton Asset Management, but it is understood the decision stemmed from financing issues and other factors.
Industry participants say the reason the two sides cannot narrow their differences is their outlook for the commercial real estate market. Sellers view the market as having hit bottom and entering a rebound phase, so they expect prices from boom times. Buyers, however, say the market will contract again later due to expanded supply when it comes time to resell, and thus they offer conservative prices.
Experts agree that office supply will be concentrated in Seoul's central business district (CBD) for about the next five years. According to commercial real estate services firm GenstarMate, a total of 36 new office projects totaling about 2.54 million square meters will be supplied in the CBD area from this year through 2029. That is about 1.6 times the average annual supply since the 2000s. If buildings are purchased last year or this year, supply concentrated at an average annual rate of about 627,000 square meters in 2027–2029, the expected future selling period, could significantly raise office vacancy rates in the CBD area around that time.
An industry official said, "Because large-scale supply is expected, sellers may feel their valuations will fall if they don't sell now," and added, "There was great hope that foreign capital with abundant funding would emerge as major financial investors (FI), but the global trend is to withdraw from the office market. I think the fact that foreigners are showing a passive stance in Korea also had an impact."