The city of Seoul glowing under the night sky (Image courtesy of Pixabay)
SEOUL, Feb. 11 (Korea Bizwire) – In the midst of rising interest rates and a challenging economic landscape, the market for office property transactions in South Korea has seen a notable decline.
Despite these conditions, financially solid domestic firms have stepped up as prominent buyers, eagerly purchasing office buildings to serve as their corporate headquarters.
According to global real estate services firm CBRE Korea, corporate investment in Seoul’s large office buildings (valued over 10 billion won) significantly increased from 24% in 2022 to 41% last year.
In contrast, the investment share of institutional investors decreased from 51% to 41% during the same period.
The total transaction value of large office buildings in Seoul decreased by 30% year-on-year to 7.7 trillion won last year. CBRE Korea noted, “While blind funds, primarily supported by pension funds and mutual aid associations, have been major sources of capital for Seoul’s commercial real estate market in recent years, the diminished investment capacity of these institutions has led to companies with available funds stepping in to fill the gap.”
Several domestic companies have directly participated in office acquisition or as strategic investors (SI) to secure headquarters. For instance, the National Credit Union Federation of Korea partnered with Mirae Asset Management in August last year to acquire the Tower 8 building in Jongno-gu, Seoul, for 549 billion won, contributing 200 billion won as a major investor.
Nexon invested 190.6 billion won early last year to acquire a 50% stake in the Autoway Tower in Daechi-dong, Gangnam-gu, for employee workspace. Hyundai Motor also purchased a 50% stake in the Scale Tower in Yeoksam-dong, Gangnam-gu, for office use.
Other companies, such as Handsome and Bithumb Korea, have also acquired buildings in the Gangnam area for headquarters purposes.
The trend of corporate investment in office buildings is expected to continue into this year. Bedding company Allerman and clothing firm F&F have been selected as preferred bidders for the T412 building (formerly Samsung Life Daechi 2 Building) in Gangnam-gu and the soon-to-be-completed Center Point Gangnam, respectively, with sales agreements currently under discussion and expected to be finalized this year.
These companies are also known to be acquiring buildings for the purpose of establishing headquarters. CBRE Korea anticipates a slight recovery in the office transaction market this year and expects companies with ample funds to continue their active investment activities in the office market.
Ashley Song (ashley@koreabizwire.com)
