Blackstone has sold a prime office building in Seoul for 792 billion Korean won ($590 million; €545 million) to local asset management company Koramco, PERE has learned.
Through its core-plus funds, the real estate heavyweight sold Arc Place, a Class A office building in Gangnam, one of Seoul’s major business districts, to Koramco on Friday, according to a statement from Blackstone. The deal was the largest commercial real estate transaction in the district since 2022.
After purchasing the asset in 2016, Blackstone undertook a complete renovation on the building where it introduced new food and beverage outlets and brought in high-profile tech tenants such as Warner Brothers, Dyson and eBay. The value of the building has risen by 70 percent from its purchase price eight years ago.
Blackstone put the office building up for sale in August 2023 and attracted bids from six different parties, including five domestic investors and one foreign investor, according to PERE sources.
Chris Kim, Blackstone’s Korea head of real estate, thought the sale was well-timed because of anticipated price adjustments in the Korean real estate market. Korean investors are expected to adjust their valuations for assets going forward because of the higher-for- longer interest rate environment, he noted.
“Korean institutional investors are becoming cautious given the overall volatility in the global market,” Kim explained. A tightening of liquidity since the beginning of 2024 has been a further challenge for those investors, he added.
Following the sale, the firm will focus on investing in fast-growing sectors in the country, such as logistics, hotels and data centers, Kim told PERE. Blackstone currently owns a retail property and a logistics asset in South Korea, according to PERE sources.
“We have a thematic approach to investing and we have certain themes within our real estate group, some of them being data centers, hotels, logistics and rental housing,” Kim said. “Unlike other markets, Korea and Japan have great fundamentals for offices. So, on a very selective basis, we are looking at offices as well.”
He added Blackstone is “very committed” to growing its real estate business in South Korea. In 2022, the firm hired Kim to build its real estate team based out of Seoul. Before joining Blackstone, Kim was co-head of Korea real estate at Angelo Gordon, where he was responsible for sourcing and executing real estate transactions in the country.
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