Reaching Record High

The total of 38 office buildings in Seoul were traded for 3.97 trillion won (US$3.52 billion) in the first half of 2017.
The total of 38 office buildings in Seoul were traded for 3.97 trillion won (US$3.52 billion) in the first half of 2017.

 

Transactions of office buildings in Seoul reached a record high in the first half of this year.

Mate Plus Advisors, a leader in comprehensive real estate services, announced on July 18 that the total of 38 office buildings in Seoul were traded for 3.97 trillion won (US$3.52 billion) in the first half of 2017. The figure is 54 percent higher than the previous highest first-half record of 2.58 trillion won (US$2.29 billion) last year.

The increase of transactions of office buildings in the first half of this year is largely due to growing deals of large buildings in downtown areas. IGIS Asset Management bought Signature Towers Seoul located in Supyo-dong, Jung-gu, for 726 billion won (US$645.05 million) in the second quarter, which is the sixth highest price in history. The Yuanta Securities building in in Euljiro 2-Ga, Jung-gu, was also sold at 217 billion won (US$192.8 million), while Susong Square in Susong-dong, Jongno-gu, was sold at 383 billion won (US$340.32 million).

By type of buyers, real estate funds bought 2.49 trillion won (US$2.21 billion) worth of office buildings, accounting for 63 percent of the total. Out of them, IGIS Asset Management closed 40 percent of the deals worth 1.61 trillion won (US$1.43 billion). The highest semi-annual transactions amounted to 5.8 trillion won (US$5.15 billion) in the second half at the moment when International Financial Center (IFC) Seoul in Yeouido was sold at 1.8 trillion won (US$1.6 billion).

The real estate industry believes that transactions of office buildings in Seoul will also continuously increase in the second half of this year. According to Mate Plus, Booyoung Group will close the deal of KEB Hana Bank headquarters building in the second half and The Hyundai Group building and Majesta City will also be sold.

A well-known head at the research division said, “Due to a prolonged period of low interest rates, ample market funds are flowing into the Seoul office market through funds and real estate investment trusts (REITs). However, the interest rates at home and abroad are expected to fluctuate in the second half of the year an increasing number of projects have been recently cancelled. These can adversely affect the market.”

Meanwhile, the vacancy rate in the Seoul office lease market in the second quarter stood at 10.1 percent, same with the first quarter. By area, the vacancy rate in Gangnam, which have shown a stable trend so far, reached 8 percent, up 1 percent point from the previous quarter. This is because there is an increasing supply of new office buildings, including Majesta City in Seocho-dong, and large tenants, such as SKC and POSCO P&S, have relocated their offices to other areas.

 

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