Promising Sectors Leading Commercial Real Estate This Year: 'Logistics and Data Centers'

More Market Improvement Opinions Than Last Year, but COVID-19 and Interest Rate Hikes Remain Variables

[Asia Economy Reporter Kim Min-young] Despite interest rate hikes and the prolonged COVID-19 pandemic, 4 out of 10 market experts believe that the commercial real estate market will improve this year compared to last year. Logistics and data centers were identified as promising sectors leading commercial real estate this year. However, the extent of COVID-19 spread and interest rate hikes were cited as the biggest variables affecting the commercial real estate market.

According to commercial real estate data company RSquare on the 31st, a survey was conducted on 110 members from real estate and information infrastructure sectors regarding their outlook on this year's commercial real estate market. As a result, 4 out of 10 respondents (41.8%) answered that the commercial real estate sales market will improve this year compared to last year. The proportion of those who responded that the market would maintain a similar level to last year was 34.5%. In total, 7 out of 10 believed that the commercial real estate market would maintain or improve upon last year's level.

Regarding the lease market, the highest proportion of respondents (40.0%) predicted it would improve compared to last year. Those who answered it would remain at a similar level accounted for 32.7% of the total.

Respondents who expected market improvement cited liquidity as the reason. Those who mentioned liquidity accounted for 33.5%, believing that although liquidity would decrease due to interest rate hikes and the end of U.S. tapering, there is still an abundance of liquid funds in the market. 20.1% of respondents anticipated that the market size would expand due to the increased share of logistics centers and internet data centers (IDC). Additionally, 15.5% said that investment demand would shift to commercial real estate as a balloon effect from the strong housing market.

The most promising sectors in the commercial real estate market this year were 'logistics and data centers (70.9%)'. This is because the e-commerce market is evolving with the application of artificial intelligence (AI) and augmented reality (AR), and fierce competition for hourly delivery is causing a surge in demand for logistics and data.

The keyword leading the commercial real estate market was 'evolution of logistics centers (37.3%)', chosen by 4 out of 10 respondents. This was followed by 'end of the low-interest-rate era (16.4%)', 'boom in individual investment in commercial real estate (13.6%)', 'polarization of the commercial real estate market (14.5%)', and 'collapse of offline retail (10%)'.

The most negatively viewed sector was 'hotels (47.3%)'. It was believed that it would take more time for domestic and international travel industries to fully recover due to the ongoing COVID-19 situation. 'Retail (34.5%)', with an uncertain future due to delayed economic recovery, followed.

The factor expected to have the greatest impact on this year's commercial real estate market was 'COVID-19 (35.5%)'. This was followed by 'imbalance of supply and demand (24.5%)', 'interest rate hikes (19.1%)', and 'the 20th presidential election (14.5%)'.

This content was produced with the assistance of AI translation services.