CBRE Korea Reports Commercial Real Estate Investment Volume Exceeds KRW 7 Trillion in Q1 2025, Driven by Forward Purchases of Prime Offices and Growth in Logistics Market

- Office transactions reached KRW 5.2 trillion, accounting for 74% of total volume—driven by forward purchases in Magok and notable deals in CBD and Gangnam
- Foreign investors are expected to maintain strong demand for value-add and core-plus investment strategies within the office and logistics sectors

April 28, 2025 (Seoul) – CBRE Korea, the world’s largest commercial real estate services company, announced that total investment volume in South Korea’s commercial real estate market reached KRW 7.0 trillion in the first quarter of 2025. This marks a 66% increase year-over-year and a 34% rise from the previous quarter, according to CBRE Korea’s ‘Seoul Figures Q1 2025’ report. The robust performance was led by the forward purchase of large-scale office assets in the Magok area and an uptick in foreign investor activity in the logistics sector.

Office transactions totaled KRW 5.2 trillion, representing 74% of total investment volume and reflecting stable market momentum. Notably, forward purchase deals in Magok—One Grove (CP4) and Le West City Tower A & B (CP1)—accounted for KRW 2.9 trillion, or 55% of total office investment. Additional major transactions in the CBD, such as Namsan Square, Crystal Square, and Jeongan Building, as well as Gangnam Finance Plaza in the Gangnam area, contributed KRW 1.2 trillion, or 23% of the office total.

The average vacancy rate for Seoul Grade A offices held steady at 2.6%. Vacancy in the GBD declined to 2.1% due to demand from IT and fintech firms including Coupang, Toss Income, and Viva Republica. The YBD’s vacancy rate decreased to 3.0% following Woori Bank’s move into Parc1. Meanwhile, the CBD experienced a slight increase to 2.7% due to new supply near Euljiro. Real effective rents rose by 1.2% quarter-over-quarter to KRW 36,488 per square meter, while face rents increased 1.5% to KRW 38,709.

The logistics sector recorded a transaction volume of KRW 1.5 trillion in Q1, with foreign capital accounting for approximately 64% of that total. Canadian firm Brookfield Asset Management acquired the Incheon S&K Logistics Center, under event of default (EOD), for about KRW 245 billion. Koramco REITs & Trust, in partnership with Singapore’s GIC, purchased the Dream Logistics Center in Incheon Hang-dong for KRW 230 billion. The vacancy rate for Grade A logistics assets in the Greater Seoul area declined by 1 percentage point from year-end to approximately 22%, with dry and cold storage vacancies estimated at 16% and 40%, respectively. While vacancy rates are expected to gradually fall due to limited new supply, market stabilization will likely take time.

As automation technology becomes more prevalent among logistics tenants, power capacity is emerging as a critical factor in site selection. With fewer new supply projects on the horizon, power infrastructure in the Greater Seoul area will become an increasingly important consideration for occupiers.

Retail transactions amounted to KRW 234.5 billion, with investment activity largely centered on small to mid-sized assets. Leasing demand was notable among Chinese brands. Xiaomi is preparing to open its first official offline ‘Mi Store’ in Korea at IFC Mall in Yeouido, while EV automaker BYD has begun deliveries of its Atto 3 electric SUV. Other brands such as e-cigarette manufacturer RELX and lifestyle retailer Miniso are also preparing to enter the Korean market.

Inbound tourism continues to recover, with 2 million foreign visitors recorded as of February 2025—an 18% increase year-over-year. While Chinese visitor numbers remain slow to recover, temporary visa-free entry measures scheduled for the second half of the year are expected to inject further momentum into the retail sector. Hotel investment is also expected to rise sharply this year, supported by market recovery and growth fueled by post-pandemic tourism demand.

Claire Choi, Senior Director, Head of Research at CBRE Korea, commented, “Korea’s commercial real estate market remained resilient in Q1, led by forward-purchase office deals and strong interest from global investors in logistics assets. We expect continued demand for value-add and core-plus strategies, particularly among foreign investors.” She added, “Although further interest rate cuts are anticipated, heightened geopolitical and economic uncertainty—such as changes in U.S. tariff policies and exchange rate volatility—make the timing unclear. As a result, yields for office and logistics assets are expected to remain largely stable, with selective downward adjustments likely in certain cases.”