Investor intentions for net buying in the South Korean commercial real estate market are the highest among major Asia-Pacific countries, a new report found.
According to the 2024 Korea Investor Intentions Survey report, published by global real estate services firm CBRE on April 4, 16% of domestic investors expressed a net buying intention. This figure is the highest compared to the net buying intentions of investors in other Asia-Pacific regions, such as Japan and Singapore, both at 8%.
The report is based on a survey conducted last December with 510 key investors across the Asia-Pacific region, including 51 domestic investors. It included questions on the outlook for real estate investment activities this year, key risks, preferred strategies, and sectors.
Factors contributing to an increase in investment include expectations for interest rate stabilization and the potential for decreasing debt costs at 31%, reasonable price adjustments at 28%, and an increase in distressed asset investment opportunities at 24%. These findings reflect a general expectation for interest rate cuts, reduced interest burdens, and price adjustments across the real estate market.
Over half of domestic investors, at 54%, preferred office assets, showing the highest preference for the third consecutive year. Unlike major overseas office markets, the trend in South Korea is driven by the low vacancy rates and rising rents of Grade A offices in Seoul. The next preferred investments were logistics centers (26%) and data centers (8%). Last year, foreign capital invested in 43% of the transactions for logistics centers in the metropolitan area. With the growth of the artificial intelligence (AI) industry, data centers are gaining interest as a new investment asset.
“With over half of domestic commercial real estate investors indicating plans to increase their investments, resolving issues such as interest rate cuts, the expectation gap between buyers and sellers, and refinancing risks due to asset value fluctuations has become crucial,” said Choi Soo-hye, head of Research at CBRE Korea.
“As expectations for a rate cut in the second half of this year rise, a gradual recovery in the commercial real estate market is anticipated. If liquidity expands, the investment size could slightly increase compared to last year,” said Choi Sung-hyeon, head of Capital Markets at CBRE Korea. “If major transactions currently underway or planned in Korea are successfully completed and if there is active buying competition among domestic and foreign investors, such positive signals are expected to drive the market’s recovery trend.”
