Overall net take-up is negative following the previous quarter

• Seoul’s overall quarterly net take-up was negative at -7,700 pyeong across all sub-markets. The CBD led with -4,474 pyeong, mainly due to WeWork Euljiro’s departure from Daishin Finance Center. Yeouido and Gangnam followed at -1,620 and -1,624 pyeong, respectively.
• This notable leasing deal took place in Anchor 1, completed in Q4 2023. As KB Kookmin Bank leased the building’s lower floors, it resolved almost all vacant space just a year after its completion. Yeouido also saw a deal with Hyundai Motor Securities in One Centinel.

All three submarket vacancy rates increase

• No new office buildings were supplied in Q4 2024.
• The overall vacancy rate reached 3.4%, rising 39 bps q-o-q. The CBD showed the largest uptick of 59 bps, posting 3.4%, upon the scheduled departures of tenants. Yeouido and Gangnam recorded 6.8% and 0.6%, respectively.

Annual transaction volume exceeds last year’s, driven by improved liquidity

• Overall net effective rent in Seoul was about KRW 141,264 per pyeong, up 0.7% q-o-q. CBD and Yeouido recorded rents of KRW 145,742 and KRW 121,238, respectively. Gangnam’s rent turned negative by -0.7% q-o-q, reaching KRW 152,867, due to an expanded rent-free period.
• Quarterly office deal volume hit KRW 4.3 trillion, including large transactions exceeding KRW 100 billion in all three precincts. Notably, Mastern Investment Management sold Donuimun D Tower to Nonghyup REITs Management for about KRW 895.3 billion in the CBD.

Outlook: Seoul’s office market is expected to maintain its appeal to foreign investors

• With several Grade B offices set to enter the CBD and Gangnam in 2025, vacancy rates for Grade B offices may rise. Against this backdrop, rent growth in existing offices, especially lower-grade buildings, may slow as landlords adjust incentives to retain tenants.
• As the BOK hinted at additional rate cuts in 2025, financing costs could decrease. The lowered interest rate environment as well as favourable exchange rates will make Korea more appealing to foreign investors.