Retail: As the inflow of international travelers grows as the pandemic fades, a welcome breeze is warming the retail market after the long slump imposed by COVID-19. The return of foreign tourists has prompted a recovery in Myeong-dong. Heavily reliant on tourism, the vacancy rate in Myeong-dong rose sharply in the wake of COVID-19, exceeding 50%, but has recently trended downward.
Office: Overall Grade A office vacancy fell for the sixth consecutive quarter in Q3, dropping 0.8 pp q-o-q to record 2.2%. As competition has intensified in GBD, where vacancy remains low, leasing activity in CBD has surged to take the spill-over demand from GBD. As the CBD vacancy rate fell sharply this quarter, all major districts in Seoul fell below the natural vacancy rate, and rents have continued to rise at a record rate this year.
Investment: Office investment volume in Seoul and Bundang totaled approximately KRW2.3 trillion in Q3 2022, and the cumulative transaction volume up to Q3 totaled KRW9.2 trillion, up on last year. Transactions occurred in all submarkets except GBD, with six deals closed in Q3. The investment market is expected to be relatively quiet in Q4 as sale withdrawals escalate in the face of interest rate hikes.
