Seoul Area Knowledge Industry Centers Saw 41.6% Sharp Decline in Transaction Volume Last Year

Number of Sales Transactions in Seoul Area from January to November
Transaction Amount Also Decreased by 30.2%
Geumcheon-gu Had the Highest Number of Transactions Last Year
Seongdong-gu Ranks First in Price per Pyeong

[Asia Economy Reporter Minyoung Kim] The number of sales transactions for knowledge industry centers, which had been attracting significant attention in the investment market, dropped by more than 40% last year.

According to actual transaction data released on the 5th by Real Estate Planet, a commercial real estate specialist company based on big data and AI, the number of sales transactions for knowledge industry centers in Seoul from January to November 2022 was 607, a 41.6% decrease compared to 1,040 transactions during the same period in 2021. The cumulative sales transaction amount was approximately 551.5 billion KRW, down 30.2% from 790.7 billion KRW.

Looking at the monthly transaction volume of Seoul's knowledge industry centers, there were 98 transactions in April last year, but this dropped to 75 in May, signaling the beginning of a significant decline. Subsequently, the transaction volume plummeted to 27 in July and reached a historic low of just 13 transactions in October this year.

This decline is attributed to a contraction in buying demand due to interest rate hikes. In fact, July last year, when transaction volumes began to plummet, was when the Bank of Korea implemented its first-ever big step (a 0.5 percentage point increase in the base interest rate). Following another big step by the Bank of Korea in October last year, the knowledge industry center sales market appears to have entered a full-fledged winter period.

By region, Geumcheon-gu was found to have the highest transaction volume last year as well. Although Geumcheon-gu's transaction volume decreased by 37.4% to 278 transactions in 2022 from 444 in 2021, it still maintained the highest total transaction volume among Seoul's districts. This was followed by Seongdong-gu with 92 transactions, Yeongdeungpo-gu with 74, Guro-gu with 67, Songpa-gu with 45, and Gangseo-gu with 43 transactions.

The price per pyeong (3.3 square meters) of Seoul's knowledge industry centers, based on exclusive area, ranged from 6.97 million KRW to 52.35 million KRW depending on the region. Seongdong-gu had the highest price at 52.35 million KRW per pyeong in 2022, up about 38.6% from 37.78 million KRW in 2021. Songpa-gu, which had the highest price at 40.95 million KRW two years ago, also rose by 27.4% to 52.19 million KRW, while Gangnam-gu recorded 45.29 million KRW, up 12.5% from 40.25 million KRW in 2021, showing that sales prices in major districts continued to rise. Geumcheon-gu, home to Gasan Digital Complex and the largest concentration of knowledge industry centers, saw its price per pyeong rise 15.5% from 16.69 million KRW two years ago to 19.27 million KRW last year.

During the analysis period, Geumcheon-gu had the highest cumulative sales transaction amount at approximately 201.1 billion KRW. This was followed by Seongdong-gu with 127.9 billion KRW, Guro-gu with 70 billion KRW, Yeongdeungpo-gu with 61.4 billion KRW, Songpa-gu with 57.1 billion KRW, and Gangseo-gu with 28.8 billion KRW. As of 2021, the order was Geumcheon-gu at 274.1 billion KRW, Songpa-gu at 150.8 billion KRW, Seongdong-gu at 134.9 billion KRW, Guro-gu at 93.2 billion KRW, Yeongdeungpo-gu at 90.5 billion KRW, and Gangseo-gu at 33 billion KRW.

Jung Sumin, CEO of Real Estate Planet, said, "Knowledge industry centers have been very popular for a while because investors can finance 70-80% of the sale and purchase price through loans, allowing investment with a small amount of capital, and they also benefit from tax reduction incentives. However, due to recent continuous interest rate hikes combined with oversupply leading to an increase in listings, both transaction volume and transaction amounts have significantly decreased compared to the previous year."

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