Retail: Despite the slowdown in the growth of the luxury market, which thrived during the pandemic, Cheongdam is seeing significant activity with a rush of new flagship stores. Cheongdam, traditionally dominated by fashion brands, is seeing multiple new entrants in jewelry and watches. This shift indicates a broader trend in the luxury market, expanding from a focus on fashion to include high-end jewelry and watches.
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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