In summary, the 2015 Seoul prime office market can be summarised as a weakened leasing market with limited core investment opportunities. However, in Q1/2016, we saw a slight recovery in both markets.

As the leasing demand increased in the all major business districts, overall Seoul vacancy rates decreased.

Usually rental rates increase in the first quarter of each year, and this year was no exception. The face rent increase rate in Q1 was 0.5%, still lower than the Consumer Price Index increase rate of 1%.

Bank of Korea (BoK) maintained the base rate at 1.5% for the tenth consecutive month.

Several properties which started sales marketing from 2015 finally changed hands in Q1/2016. The total investment volume in Q1 was over KRW1trillion, which is the highest first quarter volume since the global finance crisis.

“We do not see a demand recovery in the traditional large office occupier sectors, particularly the financial and manufacturing industries. However, the professional services industries, such as legal and corporate services and information technology, led the leasing demand in the quarter, reflecting this change in the drivers of demand.” Savills Research

View the entire report on Savills Korea here.