Commercial Investment Real Estate Summer 2020 | Page 12

WORLDVIEW:
SOUTH KOREA
Cross-Border Investment Sources
Cap Rate:
All Property Types
(As of March 31, 2020)
4.51%
Singapore
United States
United Kingdom
Germany
China
(2Q2019-1Q2020)
$7 billion
$4.6 billion
$2.6 billion
$673.4 million
$77.5 million
1Q2020 South Korea Hedonic Prices
Retail
$597.17
(Per SF)
Office
$434.34
Industrial
$180.66
Top 3 Sectors in South Korea
(2Q2019-1Q2020)
Office $51.4 billion
Retail
$18.3 billion
Industrial
$11.8 billion
Data as of June 19, 2020 provided by Real Capital Analytics
South Korea distinguished itself among
Asia-Pacific countries as the only
market to see deal volume increase
compared to year-over-year numbers, according
to data from Real Capital Analytics.
“With Australia, China, Hong Kong, Japan,
and Singapore all registering significant
double-digit declines in transaction activity,
it is slightly unusual to see such a different
performance for one market,” says David
Green-Morgan, RCA’s managing director of
Asia Pacific.
South Korea has not fully locked
down its economy during the COVID-19
pandemic, which may account for these
positive deal volume numbers. “For much
of the first quarter, South Korea was tracking
ahead of 1Q2019’s investment tally,
even when the number of COVID-19 cases
dramatically increased at the beginning of
March,” Green-Morgan notes.
Domestic buyers have been the predominant
drivers of deal activity in 1Q2020.
However, U.S. investors increased their
interest in the market in 1Q2020 from the
previous quarter — from $641.3 million to
$1.4 billion — with U.S. private equity giants
KKR and Blackstone reporting investments.
With 2Q2020 reporting a slowdown, the rest
of the year may have a different story to tell as
the full impact of the pandemic is felt. As for
property types, “South Korean institutional
investors, especially pension and insurance
companies, remained focused on Seoul office
properties as many of them had done in 2019,”
Green-Morgan adds.
10 COMMERCIAL INVESTMENT REAL ESTATE MAGAZINE
SUMMER 2020