As Korea enters the late stage of the upward cycle, economic growth is expected to weaken further to 2.5% in 2019. The low rate of inflation and sluggish employment growth is reducing the likelihood of the BoK raising base interest rates in 2019.


With higher borrowing costs, tighter regulations and lower returns set to make it more challenging for investors to find value, CBRE advises investors to consider a range of short-term strategies to take advantage of cyclical fluctuations, and long-term tactics to capitalise on structural market changes.


Approximately 183,000 sq. m. of new grade A office supply is scheduled to be completed in 2019, a figure representing 61% of the ten-year average. Although the lack of new supply is expected to ease pressure on vacancy, growth in rents will be constrained by the large volume of new stock scheduled in 2020.


Office landlords in Seoul have begun to invest in transforming retail facilities to provide a better experience and wider range of shops for tenants and visitors. From a landlord perspective, providing a high quality and convenient retail offering to office tenants can both increase asset value and provide a foundation for raising rents.


Transaction volume for logistics facilities rose by 70% y-o-y to KRW 1.2 trillion in 2018. Strong leasing demand and the completion of modern logistics facilities is expected to continuously attract solid interest from local and overseas investors in 2019.