Building Sales in Seoul Freeze... Gangnam and Seocho Drop 75%

Real Estate Planet Analyzes Actual Transaction Prices from Ministry of Land, Infrastructure and Transport
80 Commercial and Office Building Sales Transactions in October
Office Rental Market Booming...Vacancy Rate at 2.31%

[Asia Economy Reporter Kwak Min-jae] Amid an extreme real estate market slump, the volume of building sales transactions in Seoul has plummeted to levels seen during the 2008 global financial crisis. The number of building sales transactions in the commercial real estate market has fallen to double digits for the first time in 13 years, excluding the financial crisis period.

According to an analysis by Real Estate Planet, a commercial real estate specialist company, based on actual transaction prices from the Ministry of Land, Infrastructure and Transport, the number of building sales transactions in Seoul in October was recorded at 80. Real Estate Planet analyzed that this is similar to the period from October 2008 to January 2009, when monthly transaction volumes were below 100?88, 50, 69, and 61 transactions respectively?following the bankruptcy of Lehman Brothers in September 2008.

The building sales market, which had enjoyed a boom with a monthly average transaction volume of at least 200 to 300 transactions annually, has been unable to avoid a downward trend since July. While maintaining 247 transactions in the first half of this year, the volume gradually shrank to 167 in July, 155 in August, and 117 in September, before sharply dropping to 80 in October. This represents a 69.5% decrease compared to 262 transactions in the same month last year.

The area with the largest decline in sales transaction volume over the past year was GBD (Gangnam-gu and Seocho-gu). Only 15 transactions took place in October this year. This is a 74.6% decrease compared to 59 transactions in the same month last year, marking the largest drop among Seoul’s three major business districts. CBD (Jung-gu and Jongno-gu) saw a decline of 71.7%, and YBD (Yeongdeungpo-gu and Mapo-gu) fell by 68.4%.

The transaction amount also decreased. The sales transaction amount in October was 1.3603 trillion KRW, down approximately 34.3% from 2.07 trillion KRW in the same month last year. However, the decrease in transaction amount was relatively smaller compared to the drop in transaction volume, which is attributed to the inclusion of the Jongno Tower sale transaction (621.45 billion KRW) that took place in October this year. Nevertheless, the October transaction amount was the second lowest this year, following September’s 1.0472 trillion KRW, which recorded the lowest transaction amount. By district, the transaction amounts were analyzed as follows: Jongno-gu 640 billion KRW, Geumcheon-gu 248.1 billion KRW, Seocho-gu 95.5 billion KRW, Dongjak-gu 71.2 billion KRW, and Gangnam-gu 63.6 billion KRW.

Unlike the sharply cooling sales transactions, the office rental market appears to be thriving. As of October this year, the vacancy rate of office buildings in Seoul decreased gradually from 3.62% in January to 2.31%. By region, the vacancy rate of CBD office buildings was 4.06% in October, higher than other areas but has been steadily decreasing since January this year. The vacancy rate in YBD was 1.35%, and in GBD it was 0.66%. Although the GBD vacancy rate has slightly increased since May, it still remains below 1%.

Jung Soo-min, CEO of Real Estate Planet, said, "Along with the global economic downturn and seven interest rate hikes this year, the domestic commercial and office building sales transaction market has been severely impacted, showing transaction volumes comparable to those during the 2008 global financial crisis."

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