Seoul commercial property transactions reach W1.8tr as August trading cools

Seoul's commercial and office real estate market pulled back in August after a strong first half, with both transaction volume and deal count falling from the previous month. Total transaction value, which had reached the 2 trillion won range in June and July, slipped to around 1.8 trillion won in August as rising benchmark interest rates heightened market uncertainty.

RSquare Analytics, the research arm of commercial real estate services firm RSquare, analyzed actual transaction price data from the Ministry of Land, Infrastructure and Transport and found that August commercial and office transactions in Seoul totaled 1.81 trillion won ($1.35 billion) across 139 deals. Transaction volume fell 31.2 percent from the previous month and deal count dropped 24.5 percent. The average deal size came to 13 billion won, down 8.9 percent month-on-month.

For the first half of this year, both deal count and transaction volume rose compared with the same period a year earlier — up 21.8 percent and 13.8 percent, respectively. Gains were recorded across large and smaller transactions alike, with volume excluding deals worth 100 billion won or more climbing 27.6 percent.

Monthly transaction volume reached 2.81 trillion won in June and 2.63 trillion won in July, with large deals accounting for more than half of total volume in each month. In August, deal count fell to 139 from 184 the previous month, and total transaction volume dropped back to the 1 trillion won range.

The August decline extended beyond large transactions. Deals below 100 billion won fell 24.7 percent in count and 9.0 percent in volume from the previous month. Combined volume for that segment in July and August was also down 14.1 percent from the same period a year earlier.

A shift in individual deal sizes also weighed on overall volume. The number of transactions worth 100 billion won or more held roughly steady at five, compared with six the previous month, but their combined value came to 776.9 billion won — a 48.0 percent drop from the prior month.

The largest single transaction in August was the Corner136 Building in Seo-gyo-dong, Mapo-gu, which changed hands for 252 billion won. E-mart Cheonho in Cheonho-dong, Gangdong-gu, followed at 166.6 billion won, with Shinhan X-Space in Chungmu-ro 2-ga, Jung-gu, rounding out the top three at 128 billion won.

Despite the month-on-month decline, August transaction volume and deal count were up 77.0 percent and 6.9 percent, respectively, from the same month a year earlier. Cumulative transaction volume for January through August reached 15.78 trillion won ($11.8 billion) across 1,356 deals, up 13.3 percent and 16.1 percent year-on-year.

"Financing pressures stemming from benchmark interest rate increases could dampen future transactions, and market uncertainty is likely to grow," an official at the RSquare Research Center said.