Commercial real estate will be in oversupplyAfter the government instituted measures in November 2016 to cool off the real estate market, apartment prices in Seoul tumbled and analysts expect the downward momentum to continue in 2017.
According to a report by Cushman and Wakefield, Korea’s office market in 2017 will also cool off with new supplies flooding the market amid stagnant demand.
In a quarterly analysis called “Office Snapshot Q4 2016,” Cushman and Wakefield reported that the overall vacancy of office space in Seoul during the fourth quarter of 2016 fell to 10.5 percent in comparison to 12.5 percent a year before despite major market activities. One of the major market events was the relocation of Samsung Fire & Marine Insurance, which sold off its headquarters in Jung District and moved to Samsung C&T Seocho Tower in Gangnam, southern Seoul.
But the vacancy rate for 2017 is expected to rise.
One of the main drivers is the new supply of offices that will come onto the market this year.
Major office buildings such as the new AmorePacific building in Yongsan District and KEB Hana Bank building in Euljiro, central Seoul, will finish construction this year. In addition, Lotte World Tower is likely to complete its construction early this year, adding more office space near Gangnam.
“The overall office market is expected to stagger and will not enter a broad-based recovery soon,” said Cushman and Wakefield in the report. “The rise in vacancy rates is expected to continue in 2017.”
BY CHOI HYUNG-JO [email@example.com]