Korean office transaction volumes hit USD2.1b in Q1

There were 7 en-bloc transactions closed during the quarter.

Although the size of office investment transactions in the first quarter decreased compared to the fourth quarter of last year, investors’ interest in the Korean real estate market continues, supported by low interest rates and abundant liquidity. With investors remaining focused on the office sector, opportunities to invest in core assets with stable tenants are becoming more limited.

According to Colliers, despite the macroeconomic uncertainties due to COVID-19, total major office transaction volumes for Q1 reached KRW2.4 trillion (USD2.1 billion), as a number of deals were closed. As the market is full of liquidity and global outbound real estate investment remains subdued, prices in major submarkets are reaching a peak due to competition among investors.

Here’s more from Colliers:

Low interest rates and abundant liquidity are likely to drive the prices of high-quality assets higher. As domestic investors still favour the office sector, we expect increased competition for office assets with stable tenants. There are fewer prime office assets available on the market in 2021, with competition for a shrinking pool set to intensify. This is driving cap rate declines as prices rise. 

Domestic and foreign interest in logistics assets also continues to grow. We expect investors to aggressively pursue logistics assets, depressing yields as prices rise.