Real Capital Analytics data shows South Korea investment volumes rose 11 percent in 2020 to $25.1 billion, compared with a fall of 23 percent for the Asia-Pacific region as a whole. Unable to travel and view opportunities overseas, Korean institutions turned their considerable capital on their home market.
Korean investors did not abandon the rest of the world last year, however, maintaining their interest in US real estate and investing more than $5 billion there. Real estate debt has become a popular choice for Korean institutions and they kept investing through 2020. Overall, South Korea was the fourth-largest source of cross-border real estate capital in 2020.
Real estate investment managers from Korea have not made the same impression internationally as the nation’s institutional investors, with only IGIS Asset Management appearing in this year’s PERE ranking. However, this year, Samsung Life bought a 25 percent stake in Savills Investment Management, a first for a Korean
South Korea’s real estate market is centered on Seoul, the capital and home to half the nation’s population. Domestic players dominate, while a number of overseas investment managers have established offices and a track record. In normal times, Seoul is an important stopping point for managers seeking to raise equity.
Growth in investment volumes in the country, even as the wider region saw a decline
The Seoul office market has recovered sharply in 2021, JLL data shows, with the vacancy rate contracting in the first half of the year and both domestic and overseas corporations taking new space. The office investment market was also healthy, with a number of major assets changing hands, including Twin Tree Towers, an office building sold to AEW Capital by IGIS Investment Management for $380 million.
The logistics sector has been booming in recent years and has continued to thrive through the pandemic, encouraging those investors that have established positions. Earlier this year, logistics specialist ESR and Canada Pension Plan Investment Board announced they will expand their Korea Income Joint Venture, doubling the size of the vehicle to $1 billion in total equity.
Calling all data centers
South Korea saw e-commerce grow 20 percent in 2020, which has supported the expansion of the data center sector as well as logistics. Both domestic and international data center players have been developing hyperscale facilities to meet the increased demand. Korea is a leader in 5G technology and the shift to 5G networks will also support the growing data center market.
Retail rents and values slumped dramatically in 2020 but began to recover in 2021, driven by rising retail sales. However, Seoul still needs the return of tourists, particularly those from China, who have been important for both retail and hospitality.