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Investment MarketBeat Report

Jinwoo Jung • 22/07/2022

Transaction Volume Recorded KRW5.7 Trillion in the First Half of 2022

Office investment volume in Seoul and Bundang totaled approximately KRW2.2 trillion in Q2 2022, taking the cumulative transaction volume for 1H 2022 to KRW5.7 trillion, on par with the same period last year. The GBD submarket was active in Q2, with six deals closed. Koramco Reits Management & Trust established new REITs to repurchase its property, A Plus Asset Tower. It was traded at KRW430 million with the unit price, per 3.3 sqm, recorded at KRW47.52 million, marking a new record high for the Seoul office market. One notable feature is that a tech company participated in the transaction as an investor, in order to secure office space for the future. This reflects that the GBD submarket has been booming to the point where vacancy has fallen close to 0%, and corporates have an interest in investing in Grade A office buildings. Elsewhere, Multi Campus Building was sold at KRW258 billion from Samsung SRA Asset Management to KOREIT, recording a unit price of KRW40.12 million. The Apro Square transaction was also closed this quarter. Mastern Investment Management sold the building to JR AMC for KRW307 billion. In the CBD submarket, Yuanta Securities Building, owned by NH Amundi Asset Management, was sold to Capstone Asset Management for KRW306 billion. The deal was closed smoothly as Yuanta Securities did not exercise its preemption right, and Capstone plans to rebuild it as an office building in the future. Mastern Investment Management purchased Bundang M Tower in BBD from Kreits Investment Management for KRW270 billion. The large scale transaction followed the Pangyo Alpharium Tower deal in the previous quarter, with Bundang now demonstrating robust demand with the Pangyo submarket entering a mature stage.

Large Scale Transactions Including IFC to Close in 2H Amid Interest Rate Hike Expectation

The hottest topic in 1H 2022 was the sale of Yeouido IFC, expected to set a new record in the Korean investment market. Domestic and foreign asset management companies joined the takeover battle to secure IFC, a Seoul landmark, and Mirae Asset Global Investments was identified as the preferred bidder after three rounds of bids. The sale price is expected to be KRW4.1 trillion, with Mirae Asset is reportedly planning to launch REITs based on the asset. Major deals such as Shinhan Investment Tower, Seoul City Tower, Ire Building, Jongno Place, and Jongno Tower are also in their final stages and expected to close within the year. Despite concerns over financial market uncertainties, with the U.S. Federal Reserve raising its benchmark interest rate by 0.75% pp in May, and an additional rate hike expected to tame inflation, liquidity in the Korea commercial real estate market has sustained. Market activity is expected to remain strong and stable, aligned with the booming office leasing market.

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