Two themes have permeated the global commercial real estate investment market since the outbreak of the coronavirus disease (Covid-19) pandemic in 2020. The first is concerns about demand for office space, as the shift to remote work and the flight to high-quality buildings has eroded the value of many offices, especially in the United States.
The average global office vacancy rate was 17% at the end of the second quarter of this year, up from 10% before the pandemic. Additionally, the office sector’s share of global investment volume fell from nearly 35% in 2019 to 22% last year, according to JLL.
The second theme is the increasing attractiveness of the living sector, particularly the multifamily market, or the rental housing market. A combination of changing demographics and lifestyles, a private rental sector dominated by individual landlords, and investors’ desire for resilient real estate with stable cash flow led to the institutionalization of rental housing.
Asia has the most room for growth. Since 2019, the living sector has accounted for just 6% of investment activity in the region, compared to 44% in the U.S., according to CBRE data.
Offices and rental housing are major themes in the real estate industry in Seoul. In the office sector, Seoul has successfully bucked global trends. Among the major markets in Asia that have seen less disruption from the shift to hybrid working due to the pandemic, Seoul stands out from the rest. Meanwhile, the average vacancy rate for major offices in major markets in Asia Pacific was nearly 15. Knight Frank said Seoul had a shockingly low rate of 1.5% in the second quarter, by far the lowest in the region. Effective rents for Grade A offices (which take into account concessions and incentives offered by landlords) grew by a staggering 15.4% on an annualized basis in the second quarter, according to CBRE. Seoul’s commercial real estate market is an incredible source of strength in the world. A major real estate sector in Asia Pacific. Photo: AFP
Source link
