Since the Asian financial crisis in 1997 to 1998, South Korea has hit its lowest economic performance last year, recording a fall of 1 percent year-on-year.
The country has also touched the highest level of unemployment rate since the impact of the crisis, recording a 5.4 percent rate of around a million jobs shed since the outbreak of COVID-19.
The another wave of the infection recorded at the end of 2020 has prompted a boost in social distancing protocols, which created further injuries to retail and hospitality fields. While there are lesser cases recorded in the past days, the country again sees an increase in its latest record.
Despite that the situation might not appear as a favorable ground for the real estate market, South Korea has seen a significant performance on its commercial property industry last year.
Transaction volumes in the country’s capital reaches its highest in record amid a downturn in international investment and occupier markets due to the pandemic.
Data from property consultancy RCA showed that Seoul became the most actively traded retail property market in the world, as well as the second-most liquid office market.
Furthermore, the basics of the country’s commercial real estate was considered to be one of the healthiest in Asia. Last year, Seoul’s grade A office market’s net take-up and rental growth were included in the strongest in the region.
The pandemic-driven global disruption seemed to have benefited South Korea, which ranks fourth in Asia in terms of economy.
The country’s largest export item — semiconductors — which have a large demand due to the insufficiency of computer chips, has aided in counteracting the lows in domestic consumption.
South Korea’s resilience and maturity in its economy plays an important factor building up confidence in the commercial property sector.
Among the 37 members of the Organisation for Economic Cooperation and Development club of developed countries, South Korea’s 1 per cent contraction landed as the smallest, which made it possible to exceed the income per head level of the Group of 7 member, Italy.
The wave of investments in modern houses have benefited South Korea. According to a report by JLL in July last year, the logistics market of Seoul is anticipated to bring high returns to buyers in the next few years, while the capital’s office investment markets are considered as Asia’s least unstable.
However, the country’s logistics infrastructure remained outdated despite that its economy was already advanced. There is still a lot of space to close in the gap between the country’s logistics and office production.