The Seoul office investment market has experienced a notable slowdown in Q1/2025, with transaction volume significantly below the quarterly average observed in 2024. Despite an abundance of office assets being marketed for sale, actual transaction closings have been limited. The bid-ask spread has widened as sellers maintain price expectations established in 2023-2024, while buyers have adopted more conservative underwriting given the uncertain economic outlook and rising vacancy concerns.
According to a Savills report, the Korean economy has entered 2025 facing increasing headwinds, as the Bank of Korea recently revised downward its GDP growth forecast for 2025 from 1.9% to 1.5%, citing persistent challenges in both domestic consumption and export markets.
“This downward adjustment reflects broader concerns about the economy's momentum as global demand continues to show signs of fragility, particularly from China, Korea's largest trading partner,” the report added.
A distinctive trend becoming more prominent in Q1 is that transactions actually progressing to closing are increasingly backed by end-users, rather than traditional institutional investors.
These end-user acquisitions typically involve companies purchasing buildings for their own occupancy, thereby eliminating leasing risk concerns which currently deter many institutional investors.
This shift signals a market recalibration phase where traditional investment models are being challenged by the current economic environment.
