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South Korea Real Estate Report Q1 2011
Business Monitor International, Jan 2011, Pages: 61
South Korea Real Estate Report provides industry professionals and strategists, corporate analysts, real estate associations, government departments and regulatory bodies with independent forecasts and competitive intelligence on South Korea's Real Estate industry.
Key Insights On The Real Estate Sector Of South Korea
South Korea is an unusual country in that protagonists in the commercial real estate sectors of two of itsmajor cities – Seoul and Daegu – were apparently unaffected by the global financial crisis and thesubsequent downturn in world trade.
In early 2010, our in-country sources indicated that developers in those two cities, whether as a result ofgood luck or good management, had been able to maintain a broad balance between supply and demandof commercial property – and across all three major sub-sectors. Rents held up through 2009; yields fell;capital values increased, although this may at least in part have been a consequence of new tax breaks thatfavour landlords.
Busan is an exception in that developments in its commercial real estate sector are far more similar tothose in most other countries that BMI surveys. Our in-country sources indicated that rents fell sharply inall three sub-sectors in 2009. Capital values fell further, with the result that yields actually rose. The mainproblem appears to be a huge increase in supply as a result of new projects that are becoming available tonew tenants over the next year or so. Some of the projects are under construction. Others have been built,but are unlet.
In the second round of interviews with in-country sources, which we conducted in mid-2010, thecomments confirmed our previously held view: 2009 had been the year of adjustments, in response to thediffering conditions in the three cities’ real estate markets. Since the beginning of 2010, rents have fallenslightly in the retail sub-sectors, but otherwise appear to have tracked sideways. Looking forward towards2015, we continue to believe that yields will remain broadly unchanged. Any changes in rental rates willlikely be met by similar changes in capital values.
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