The ‘Seoul Office Sale Index’, starting at 100.0 points in the first quarter of 2001, reached 342.3 points by the fourth quarter of 2018. (image: Yonhap)
SEOUL, Mar. 1 (Korea Bizwire) — Over the last 18 years, sale prices of office space in Seoul rose by an average of more than 7 percent each year, with transactions surpassing a total of 10 trillion won (US$8.8 billion) on average each year.
IGIS Asset Management Co. and Daishin Securities Co. announced on Thursday that sale prices of office space had risen by an average of 7.2 percent each year between from 2001 to 2018.
The ‘Seoul Office Sale Index’, starting at 100.0 points in the first quarter of 2001, reached 342.3 points by the fourth quarter of 2018.
Prices dropped in the third quarter of 2009, tumbling by 11 percent after the global financial crisis swept the nation, and remained depressed until 2011.
Over the past three years, sale prices have risen by average of 5.3 percent each year, 3.3 times larger than the rise in consumer prices (1.6 percent).
IGIS and Daishin Securities explained that the low rate of return among equities and bonds and high volatility has led to an inflow of investment in the relatively stable office market in Seoul, contributing to the price increases in recent years.
In fact, from 2010 to 2018, the interest rate of five-year treasury bonds dropped from 4.69 percent to 2.04 percent per annum, while the cost of office space rose by 43.4 percent.
Since 2011, sale prices for office space grew steadily along similar patterns of GDP growth.
The volume of transactions in Seoul office space went from 7 trillion won in 2007 to 10.1 trillion won in 2016. In 2018, real estate worth 9.9 trillion won changed hands.
H. M. Kang (hmkang@koreabizwire.com)
