26 Jan 2017
Due to the effect of Samsung Fire & Marine Insurance Co., Ltd (hereafter, SFMI Co., Ltd)’s relocation, the vacancy rate in the GBD dropped by 1.0%p, whereas the CBD’s rate increased by 0.3%.
In 4Q 2016, as SFMI Co., Ltd ended up the Gang Buk era and completed the relocation to Gang Nam, Seoul office leasing market fluctuated. According to Colliers International Korea, the vacancy rate of Seoul office leasing market in 4Q 2016, was recorded as 9.0%p which decreased by 0.4%p. Apparently, the vacancy rate in overall Seoul offices decreased, but if looked at closer by districts, due to the relocation effect of Samsung to Gang Nam, the vacancy rate in the CBD increased, while the GBD’s vacancy rate dropped by 1.0%p. This shows how big the effect of the relocation of large conglomerates really is to the leasing market. These kinds of relocation effect of large conglomerates to the leasing market are expected to stand out this year as well. According to Myeonghan Yu, the leader in research and Advisory team, since the headquarter of KEB Hana Bank, Amorepacific building, Lotte World Tower and some others will be completed within this year, considerable relocation of large conglomerates are expected, which will lead the vacancy rate increases around the office building stock. Therefore, more careful attentions are required to solve the vacancy in advance.
Nominal office rent increased by 0.9%p compared to 4Q 2015, reached the highest level since 4Q 2013.
In the meantime, due to the effect of newly supplied office buildings and low inflation rate, the nominal rent was around 0.6%, such a low ascension rate. However, because of the effect of seasonal reasons and the rebound of CPI, it was recorded as the historically highest level of ascension rate, 0.9%p since 4Q 2013.
Due to the IFC transaction, the volume of office transaction in 4Q 2016 reached KRW 3,378 billion won (USD 2.90 billion), the largest transaction in quarterly.
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Meanwhile, the Seoul office market in 4Q 2016 was transacted with 24 office buildings, at KRW 3,378 billion won (USD 2.90 billion), and this volume increased by 35.8% than the 4Q 2014 when the largest volume scale was recorded. This occurred due to the IFC transaction in YBD and transaction volume of three office buildings of IFC reached KRW1, 850 billion won (USD 1.59 billion), the historically highest volume, in overall Seoul office transaction. Among the major transaction, DSME building in the CBD used to be the headquarter of Daewoo Shipbuilding Marine & Engineering construction Co. Ltd, earned the capital gain of KRW 790 billion won (USD 0.67 billion) over the last five years and this transaction might contribute to improving their financials.
Myeonghan Yu, Manager
Research & Advisory, Colliers International Korea
Phone: +82 2 3775 7236