Commercial Real Estate Transaction Volume in the First Half of This Year Decreases by 27.4% Year-on-Year

Interest Rate Hikes and Inflation Effects Intensify

Demand May Slow Due to Decreased Facility Investment and Operating Cost Reduction

[Asia Economy Reporter Kim Min-young] It has been found that the transaction volume of office and commercial real estate in Seoul significantly decreased in the first half of the year.

According to an analysis by RSquare of the semiannual transaction trends of Seoul office and commercial real estate sales through the Korea Real Estate Board, the total sales volume in the first half of this year was recorded at 13.9612 trillion KRW as of the 7th of this month. This represents a 27.4% decrease compared to the same period last year.

Even considering that June transactions have not been fully accounted for, the transaction volume has declined. The transaction volume from January to May this year decreased by 7.2% compared to the same period last year. Office and commercial real estate includes offices, retail stores, and lodging facilities.

Last year, the commercial real estate market saw increased investment demand due to government liquidity injections in response to COVID-19 and regulations on residential real estate. The transaction volume, which took a direct hit from COVID-19 in the first half of 2020 with 9.8233 trillion KRW, rebounded in the second half, recording 19.2302 trillion KRW in the first half of 2021 and 15.9280 trillion KRW in the second half. Annually, last year’s transaction volume for office and commercial buildings in Seoul increased by 30.8% compared to the previous year.

The leasing market, which has been booming to the point that vacancies are hard to find in Gangnam, downtown, and Yeouido, is also expected to be adversely affected. This is because office demand may decline as more companies face management difficulties or fail to receive timely investments.

Ryu Kang-min, Head of RSquare Research Center, said, “Due to economic slowdown caused by interest rate hikes and decreased facility investment, the growth in office demand may slow down. There is also a possibility that tenants may relocate from Seoul’s prime areas to other relatively cheaper districts in Seoul to reduce operating costs.”

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