Coronavirus has darkened the outlook for Asia’s real estate market, but South Korea remains a rare bright spot
- Unlike markets heavily dependent on cross-border investment, South Korea has a large domestic investor base
- The country’s property market is also benefiting from its success in containing the spread of Covid-19, with GDP expected to contract significantly less this year than in other major economies
Yet, since the coronavirus crisis escalated dramatically earlier this year, deal making has fallen more precipitously. In a report published last week, JLL noted that transaction volumes in the first quarter of this year dropped 34 per cent year on year, with mainland China, Hong Kong and Singapore bearing the brunt of the declines.
According to JLL, the level of investment was the lowest for a first quarter since 2016, and overstates the amount of activity since a large portion of the transactions stem from the completion of deals entered into contract in previous quarters.
However, one major investment market not only bucked the trend of rapidly declining transaction volumes, it gained further momentum, having emerged as one of the world’s most actively traded commercial property markets last year. In South Korea, investment last quarter increased 32 per cent year on year, data from JLL shows.
Not only has this cemented Seoul’s position as Asia’s most liquid real estate market, it holds lessons for other markets.
