Metropolitan Area Knowledge Industry Center Transactions 'Halved'... Rising Rents Also Undermine Competitiveness

Although the housing market has recently shown signs of recovery, the knowledge industry centers, which were once popular investment destinations, are facing a downturn. In the metropolitan area, the volume of transactions has halved due to decreased investment attractiveness caused by interest rate hikes and economic recession. Additionally, rising rents in prime locations have raised concerns that the competitiveness of knowledge industry centers could be lost.

Semiannual Trend of Knowledge Industry Center Transactions in the Seoul Metropolitan Area / Image provided by Zigbang

On the 21st, real estate platform Zigbang analyzed registered transaction data from the Registry Information Plaza and data from the Korea Industrial Complex Corporation, revealing that last year, the number of knowledge industry center transactions in the metropolitan area was 3,635, a 45.1% decrease compared to the previous year (6,624 transactions). The first and second halves of the year recorded 2,611 and 1,024 transactions respectively, showing declines of 17.2% and 60.8% over the same periods.

The transaction volume for the first half of this year was recorded at 989. Since pre-registration transactions are not included, the actual number may be slightly higher, but it is likely to remain around half compared to the first half of last year. The transaction volume of metropolitan knowledge industry centers began to decline from the second half of 2021 and sharply dropped last year. Zigbang attributed this to increased financial burdens from interest rate hikes as well as oversupply and rising vacancy rates.

On the other hand, the sale price per square meter showed an upward trend. In the first half of this year, the average price per square meter of knowledge industry centers in the metropolitan area was 5,581,000 KRW, up 4.7% (25,130 KRW) from 5,329,700 KRW in the same period last year. Although prices steadily rose until the first half of last year and then fell to 4,964,700 KRW per square meter in the second half, the difficult economic conditions led buyers to selectively trade in locations with advantages such as accessibility, maintaining price increases mainly in Seoul and Gyeonggi Province.

The knowledge industry center with the highest transaction price in the first half of this year was 'Ace High-End Tower 3rd Phase' (13th floor, exclusive area 701.5㎡) in Gasan-dong, Geumcheon-gu, Seoul, which was sold for 5 billion KRW in March. Following that was 'Bundang Suji U Tower' (14th floor, exclusive area 291.09㎡) in Dongcheon-dong, Suji-gu, Yongin-si, Gyeonggi Province, sold for 2.9 billion KRW in February. Additionally, the knowledge industry center with the highest price per square meter was 'Pohyu' in Seongsu-dong 1-ga, Seongdong-gu. In February, a 7th-floor unit with an exclusive area of 107.71㎡ changed hands for 2.12 billion KRW.

Ham Young-jin, head of Zigbang Big Data Lab, said, "In a situation where investors are scarce, transactions were mainly made in knowledge industry centers located near subway stations and those that were not built long ago." He added, "As prices rise, rent increases to secure appropriate rental income accompany this, reducing the competitiveness of previously low rental rates, which may lead to a stagnation in the knowledge industry center investment market."

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