Retail: The number of foreign tourists visiting South Korea in Q1 2024 was the highest since COVID-19. According to the Ministry of Justice, overseas tourist arrivals in Q1 were approximately 3.4 million, representing a recovery of 89% of the pre-COVID performance. With the recent shift in foreign tourist travel preferences, from group to individual touring, Hannam∙Itaewon and Seongsu have experienced a surge in visits. Foreign tourists are now seeking travel information directly through social media, leading to more visits to Hannam∙Itaewon and Seongsu, also highly favored by younger Korean consumers.
Office: Overall Grade A office vacancy in Q1 fell by 0.2 pp q-o-q to 2.4%. Overall Grade A rents climbed by 0.6% q-o-q, with significant increases at several properties in YBD following the completion of the TP Tower. In 2H 2024, new prime office projects are expected to be supplied in the Magok District, making it a new option for tenants seeking expansive space and a favorable working environment.
Capital Markets: Total office building transaction volume in Seoul and Bundang in Q1 2024 totaled approximately KRW2.7 trillion, with eight deals completed. This is a rise of 46% q-o-q, and 172% y-o-y. Transactions in Q1 primarily focused on more easily financed assets of around 10,000 sqm, with deals in the range of KRW200 to KRW300 billion. As Seoul Grade A office sale prices have softened, the office market capitalization rate rose by 0.2 pp from the previous quarter. The number of buyers is relatively limited, and the time taken to complete transactions has grown. We expect to see this trend to continue for the foreseeable future through 2024, with transactions chiefly focused on core assets, while also expanding to include value-add assets to maximize value at current attractive prices.
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