As the price increase in the Seoul office market continues, forecasts suggest that the transaction price for major buildings will exceed 40 million won per 3.3㎡ (1 pyeong).

The view of a building densely packed with officetels from the 63 Building in Yeouido, Seoul. /Courtesy of News1

According to a report released on the 15th by the commercial real estate service corporation, Genstar Mate, the Seoul office market is expected to see an annual transaction price increase of 6-7% after 2025. Currently, the average transaction price for Seoul offices is maintained at around 28.18 million won per pyeong, particularly in the central business district (CBD) and the Gangnam area (GBD), where the transaction prices are expected to exceed 40 million won per pyeong.

However, the vacancy rate of Seoul offices is expected to gradually rise due to new supply in areas like Magok and Seongsu, Genstar Mate noted. By the end of 2026, the vacancy rate is projected to reach 8.7% and to increase to at least 14% by 2029. The rental increase rate is expected to peak at around 7% in 2024 before gradually declining.

The report analyzes that the currently ongoing transactions of 'Daeshin 343' in the CBD and 'Coreite Tower' and 'Centerpoint Gangnam' in the GBD are expected to be traded at prices above 40 million won per 3.3㎡.

Additionally, the average rental price for Seoul offices is steadily rising, and it is expected to surpass 100,000 won per 3.3㎡ for the first time next year.

Meanwhile, the logistics real estate market is anticipated to stabilize as new supply in 2025 is expected to decrease to half of the previous year's volume (approximately 1.29 million pyeong). As of the third quarter of 2024, the vacancy rate for logistics centers in the capital region recorded 15.1%, but the vacancy rate for existing centers, excluding new supply, remains at a healthy level of 7.8%.

The report explained that while investments by domestic investors in logistics centers have declined over the past two years, interest from foreign investors continues steadily. Foreign investors are conducting selective investments focused on ambient logistics centers with stable tenants. Examples of foreign investor purchases last year include the Daedeok logistics center in Anseong, Gyeonggi Province (LaSalle Middle East Sovereign Fund), the Naedong mixed logistics center in Bucheon, Gyeonggi Province (GIC), and the Yeoju Logistics Hub in Yeoju, Gyeonggi Province (AEW).

For this year, the retail market is expected to decline due to continued poor performance of offline retailers. In 2021, the transaction volume for large retail facilities was about 6 trillion won, but it has continuously decreased, with the annual transaction value reaching only 200 billion won as of the third quarter of last year. Genstar Mate noted that most of the retail facilities recently on the market were traded not for operations but for development, change of use, or remodeling.

Kim Kyujin, head of the research center at Genstar Mate, said, 'The commercial real estate market in 2025 is expected to gradually improve investor sentiment due to interest rate cuts, but the fortunes of assets will vary.' He added, 'The new supply pressure will be a key factor for offices, vacancy relief for logistics centers, and recovery of market conditions for retail, indicating that close market monitoring through understanding the characteristics of individual assets will be necessary.'