The full-blown impact of the coronavirus pandemic will likely be felt in the commercial real estate market in the fourth quarter. A spike in the office vacancy rate and rent falls are pushing real estate prices lower, the South Korean Military Mutual Aid Association’s (MMAA) chief investment officer said.
Investors need to maintain a conservative stance for now as both domestic and overseas commercial real estate markets could falter in the fourth quarter, MMAA CIO Jae Dong Kim warned in a recent interview with The Korea Economic Daily. He said the aftershocks of the coronavirus could be much more severe than imagined.
A global real estate services firm said in a recent report that Seoul’s prime office building market will begin to face flagging demand from the second quarter of this year due to the pandemic.
Savills Korea said real estate investors in South Korea are expected to take a cautious stance as uncertainties in the leasing market and liquidity risks are both rising simultaneously.
Meanwhile, the impact of the pandemic has yet to hit the commercial real estate market in the capital city as of the first quarter. The volume of transactions by Seoul’s prime office properties rose 14 percent to 2.4 trillion won ($1.93 billion). (Reporting by Jin-won Lee)