SOUTH KOREA Trends and Developments Contributed by: Junghwan Lee, Dong Seok Woo, Jun Woo Cho and Jee In Kim, Lee & Ko
Sector-Specific Investment Trends: Office, Logistics, Data Centres and Hospitality In 2025, South Korea’s commercial real estate market exceeded KRW33 trillion in transaction volume, set - ting a new record despite a low-growth environment in the low 1% range. At the same time, rising uncertainty pushed more capital toward prime assets and brought sector-by-sector differences in supply and demand into sharper focus. In 2026, the market is expected to remain polarised, with momentum continuing to con - centrate around prime assets. Office In 2025, Seoul office transaction volume reached a record high of approximately KRW21.1 trillion, repre - senting an increase of about 45% from the previous peak. Prime assets accounted for 81% of transaction volume, which is up 22 percentage points year-on- year. Strategic investors and end-users led the mar - ket by participating in 49% of all transactions, while share-deal structures rose sharply to 33% of total office transactions, more than four times the average of the preceding four years. On the leasing side, con - strained supply kept fundamentals resilient, with aver - age vacancy for Seoul’s prime office buildings at 3.7% and nominal rent growth of 5.1%. A representative 2025 transaction was BentallGreenOak’s acquisition of Tower 730 in Jamsil for KRW869.4 billion through a share deal structure. In 2026, overall vacancy in Seoul’s prime office mar - ket is expected to rise to the 5–7% range, driven by the relocation of major conglomerate affiliates and the delivery of approximately 210,000 square metres of new prime office supply, particularly in the CBD. Rent growth is also expected to moderate to 2–4%. Even so, continued inflows of domestic institutional blind fund capital and a stable benchmark interest-rate environment are expected to keep actual cap rates in the low-4% range. Logistics In 2025, the prime logistics market in the Greater Seoul Area entered a stabilisation phase as new sup - ply fell by approximately 71% year-on-year, helping to ease the supply-demand imbalance that had built up over the previous three years. Even so, polarisa - tion by location and facility type became more pro -
nounced. Dry storage facilities performed relatively well, supported by flight-to-quality leasing demand from e-commerce operators concentrated in western Gyeonggi and third-party logistics providers concen - trated in southern Gyeonggi. Together, those tenant groups accounted for 77% of leased area in the prime logistics market, while dry storage assets recorded an 11% vacancy rate and 2.4% nominal rent growth. Cold storage assets, by contrast, continued to face a significant supply-demand mismatch, with vacan - cy reaching 36%. In the investment market, foreign capital represented 68% of total logistics transaction volume in 2025, and KKR’s acquisition of Brookfield’s Cheongna Logistics Center for approximately KRW1 trillion established a new record for the largest single- asset logistics transaction in Korea. In 2026, supply is projected to decline to a histor - ic low following the implementation of the partial amendment to the Ordinance on the Creation of a Safe Residential Environment from the Proliferation of Warehouses. Within the cold-storage segment, an increasing number of projects are expected to incor - porate value-add strategies from the outset by con - verting a portion of cold-storage space to dry storage to enhance profitability. Investment capital is likewise expected to become even more concentrated in prime assets, with project cap rates settling at around 5%, a slight decrease from the prior year. Data centres South Korea’s commercial data centre market is undergoing a structural transition from enterprise- owned facilities to colocation-led platforms serving third-party users, with global cloud service providers and financial investors increasingly supplanting tra - ditional telecommunications carriers as the primary forces shaping the market. A notable 2025 transac - tion was CPPIB’s development of a 52 MW facility in Hang-dong, Guro-gu, backed by KRW600 billion in project financing. While an average annual supply of approximately 397 MW is planned nationwide through 2030, actual delivery in the Greater Seoul Area is expected to be delayed by permitting constraints, most notably due to restrictions relating to power availability. Non-met - ropolitan areas, by contrast, are expected to benefit
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