“Gangnam real estate never dies” is a popular phrase in Korea and is still proving to be true. The Gangnam office market, enjoys the lowest vacancy rate and the strongest rental growth out of the three major core business districts in Seoul. While this has led to an intensive increase in real estate investment in Gangnam, the question many ask is how has this growth been sustained for so many decades?
In the 1970s, over 75% of Seoul’s population lived north of the Han River, or Gangbuk. To diversify the population, the government introduced initiatives such as tax subsidies to promoted the development of Gangnam. At the same time, new construction or expansion of commercial facilities were prohibited in Gangbuk, and permits to open business in the area became more difficult to get. Additionally, the city announced its plans to relocate government offices including City Hall and Prosecutor’s Office to the Gangnam area. Lastly, Seoul’s leading private high schools were also moved to Gangnam and are part of Seoul’s famous eight school district schools.
In the 1990s, aided by economic expansion and the subway line 2 that penetrated Teheran-ro, the business district in Gangnam, a large volume of office buildings in Teheran-ro were introduced into the market. Shortage of office space in Gangbuk and comparably lower rents in Teheran-ro area along with the fact that the new buildings there had a bigger floor plate and offered building automation, security and parking spaces, attracted a number of large companies to relocate their head to this area.
After the IMF cold wave saw a number of financial related workforce leave the district, Teheran-ro has now become a popular area for IT and startups. This district also has the advantage of the “Data Communication Autobahn”, which is the world’s best high-speed optical communication network. These optical fibers can transmit 155 million bytes per second and has been a major attraction for companies such as Microsoft and IBM. Smaller software companies were attracted by the presence of Korea Software Industry Association who also provide startup support.
In early 2000, the district welcomed global IT companies and domestic conglomerates such as Apple, Qualcomm, Hyundai Mobis and GS Group and is now favored by not only IT sector but various industries thanks to its great transportation access and vibrant culture.
In the year of 2022, the mega-project Hyundai Global Business Center (GFA 926,162m2) is expected to come online to house Hyundai Motor Group’s new headquarters along with hotel, retail and convention facilities. The project is expected to be another game changer as part of Seoul city’s plan to develop a new landmark and to facilitate Samsung-dong area as a strategic location for global business and international affairs. Although new power centers like Pangyo is rising at the moment, it is likely that the interest in ‘Gangnam’ will not fade away any time soon.
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