Opinion | South Korea’s commercial property market is surging despite the Covid-19 pandemic

Name: Deaths of South Korean couriers blamed on overwork during pandemic delivery boom
Uploaded: 2021-02-23T01:45:14.000Z
Duration: 3 min 44 s
Description: Deaths of South Korean couriers blamed on overwork during pandemic delivery boom

Despite a sharp downturn in global investment and occupier markets, transaction volumes in Seoul hit an all-time high as the capital became a new hotbed

As Asia’s commercial property markets slowly recover from their sharpest downturn in more than a decade, South Korea has defied the slump in spectacular fashion

Reading Time:3 minutes

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A couple wearing masks to protect against the coronavirus ride next to the Han River in Seoul, South Korea on April 4, 2020. The relative resilience and maturity of South Korea’s economy is the key factor underpinning confidence in the commercial property sector. Photo: Reuters

Nicholas Spiro

Published: 9:45am, 23 Feb 2021Updated: 10:05am, 23 Feb 2021

Last year, South Korea’s economy suffered its worst performance since the 1997-98 Asian financial crisis, shrinking 1 per cent year on year. The country’s unemployment rate has surged to 5.4 per cent, its highest level since the aftermath of the crisis, with almost 1 million jobs lost since the Covid-19 pandemic erupted.

A resurgence in infections at the end of last year led to tougher social distancing rules, hitting the retail and hospitality sector hard. Although the number of new cases has since fallen sharply, they have been ticking up again in recent days.

That this might not seem like fertile ground for a buoyant and resilient real estate market makes the stellar performance of South Korea’s commercial property industry last year all the more remarkable.

Despite a sharp, virus-driven downturn in global investment and occupier markets, transaction volumes in Seoul reached an all-time high. South Korea’s capital has emerged as the world’s most actively traded retail property market, and it was also the second-most liquid office market, according to data from property consultancy RCA.

What is more, the fundamentals of South Korean commercial real estate are among the healthiest in Asia. Net take-up and rental growth in Seoul’s grade A office market were among the strongest in the region last year, while robust pre-leasing demand for a wave of new modern logistics facilities expected to be delivered in the next two years is keeping vacancy rates low.

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Deaths of South Korean couriers blamed on overwork during pandemic delivery boom

Although Asia’s fourth-largest economy might have had its worst year since 1998, it is one of the biggest beneficiaries of the pandemic-induced disruption in the global economy. Fierce appetite for semiconductors – South Korea’s largest export item and a product in huge demand because of an acute shortage of computer chips – has helped offset weakness in domestic consumption.

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