SOUTH KOREA Law and Practice Contributed by: Hyeon Kang, Tae Kyoon Kim, Seungil Hong and Sung-Ho Moon, Bae, Kim & Lee LLC
1. General 1.1 Main Sources of Law The main sources of real estate law are as fol - lows: • the Civil Code; • the Real Estate Registration Act (RERA); • the National Land Planning and Utilisation Act (NLPUA); • the Report of Real Estate Transaction Act (RRETA); • the Building Act; • the Housing Lease Protection Act (HLPA); and • the Commercial Building Lease Protection Act (CBLPA). 1.2 Main Market Trends and Deals In 2025, the Korean economy is expected to experience a slowdown following the modest growth in 2024. The Bank of Korea’s base inter - est rate is expected to be further reduced this year following the two reductions implemented at the end of last year. However, the speed of such reductions will depend on domestic and international economic conditions. In 2024, the Seoul commercial real estate mar - ket recorded a transaction volume of approxi - mately KRW11.6 trillion, reflecting solid growth of about 24% compared to the previous year. In particular, large-scale transactions totalling KRW3.6 trillion were closed in the fourth quar - ter. One notable transaction in the fourth quar - ter involved NH REIT Management’s investment vehicle purchasing a major office building known as D-Tower for KRW895.3 billion from MASTERN Investment Management, making it the sec - ond largest transaction of the year. The largest transaction was the third-quarter sale of Asset Gangnam at KRW1.1 trillion. Other major deals included Hanwha REITs’ acquisition of Hanwha
Building in the third quarter for KRW8.08 trillion, and KORAMCO REITs and Trust’s acquisition of the Arc Place building from Mirae Asset Man - agement in the first quarter for KRW7.917 tril - lion. Investor interest in prime-grade buildings and offices with development potential remains strong and is expected to continue into 2025. The Korean logistics centre market, which suf - fered from oversupply in 2023, showed signs of recovery in 2024, with diverse transaction structures being utilised. Departing from the customary indirect investment method, there has been a noticeable rise in transactions based on builders’ construction completion and debt guaranty. Additionally, the logistics market has seen an increase in foreign investors participat - ing in these transactions. In 2023, the volume of large hotel transactions was very low at KRW0.4 trillion. However, in 2024, transactions involving five-star hotels sig - nificantly increased, reaching KRW1.8 trillion. This increase reflects a shift from development- purpose transactions to operational-purpose transactions, indicating a recovery in the hotel market. Further, a recent trend has seen the introduc - tion of new business models that leverage blockchain and other disruptive technologies, such as digital asset-backed securities (DABS) offered with real estate as the underlying asset. The Korean government has been supportive of new technologies and has exempted the appli - cation of current regulations to business mod - els designated as an innovative financial service under “regulatory sandbox” regime. Since 2019, several real estate investment plat - forms have been admitted to the regulatory sandbox, enabling them to offer trust interests
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