Business Monitor International


South Korea Real Estate Report

Published 13 October 2014

  • 74 pages
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  • Includes 3 free updated quarterly reports
 
$1,295.00
South Korea Real Estate Report

BMI View: South Korea boasts a well developed commercial real estate sector with a strong financial sector and an affluent population supporting demand for commercial property. The country's export sector, which is key to economic growth, means the country also has extensive demand for industrial space. While the market is dominated by local firms, including an increasing number of Korean conglomerates, foreign direct investment has been growing steadily in recent years.

The outperformer in the long term will be the retail sub-sector, driven by increasing demand for Western-style shopping experiences, as well as the arrival of international retailers and tourists into the country. Although the creation of new retail space could cause some fluctuation in rental and vacancy rates, in the long term the story is one of solid growth. This is true of all the cities that we cover, but we do note that although the retail market is Seoul is mature, elsewhere in the country there is certainly room for growth.

In terms of office space, the city is dominated by Seoul, a regional hub for business and for finance. Although some areas of the city are reported to be seeing higher vacancy rates in the aftermath of the global financial crisis, we are optimistic that demand will remain strong. Grade A space in particularly sought after, both by domestic chaebols and international firms.

Although we are less sanguine towards industrial real estate, as South Korea's traditionally strong manufacturing sector has been buffeted by global economic headwinds over the past few years, we note government efforts to rebalance the industrial sector towards more value-added industries such as innovative IT products and bio-science, and believe this will have long-term upside for the industrial real estate sector.

The South Korean commercial real estate sector is dominated by real estate investment trusts (REITs), indicating its developed nature. REIT activity is only likely to increase, and, in...

Table of Contents

BMI Industry View
7
SWOT
9
Political
12
Economic
13
Business Environment
14
Industry Forecast
15
Construction And Infrastructure Forecast Scenario
15
Table: Construction And Infrastructure Industry Data (South Korea 2012-2017)
15
Table: Construction And Infrastructure Industry Data (South Korea 2018-2023)
16
Industry Forecast
26
Office
28
Table: Forecast Office Rents, 2014 And 2015 (USD per m2/month)
29
Table: Forecast Short-Term Office Net Yields, 2014-2015 (%)
29
Table: Forecast Long-Term Office Net Yields, 2010-2018 (%)
30
Retail
30
Table: Forecast Retail Rents, 2014 And 2015 (USD m2/month)
31
Table: Forecast Short-Term Retail Net Yields, 2014-2015 (%)
31
Table: Forecast Long-Term Retail Net Yields, 2010-2018 (%)
32
Industrial
32
Table: Forecast Industrial Rents, 2014 And 2015 (USD per m2/month)
33
Table: Forecast Short-Term Industrial Net Yields, 2014-2015 (%)
33
Table: Forecast Long-Term Industrial Net Yields, 2010-2018 (%)
34
Macroeconomic Forecasts
35
Economic Analysis
35
Developed Markets, Investment Spending To Support Growth
36
Outlook Not All Rosy
37
Table: Economic Activity (South Korea 2009-2018)
37
Industry Risk Reward Ratings
38
Asia - Risk/Reward Ratings
38
Table: Asia - Real Estate Risk/Reward Ratings
38
South Korea Risk/Reward Ratings
39
Rewards
39
Risks
40
Market Overview
41
State Asset Sale
43
Winter Olympics Boosts Real Estate Outlook
43
Seoul
44
Busan
45
Daegu
45
Office
46
Table: Historical Rental Costs, 2012-2014 (USD per m2/month
47
Table: Historical Net Yields, 2012-2014 (%)
48
Table: Terms Of Rental Contract/Leases, H213
49
Retail
50
Table: Historical Rental Costs, 2012-2014 (USD per m2/month)
52
Table: Terms Of Rental Contract/Leases, H213
53
Industrial
54
Table: Historical Rental Costs, 2012-2014 (USD per m2/month)
56
Table: Historical Net Yields, 2012-2014 (%)
57
Table: Terms Of Rental Contract/Leases, H213
58
Competitive Landscape
59
Office
60
Retail
61
Industrial
61
Company Profile
63
FGN Real Estate Development Investment Trust
63
GS Engineering & Construction Corporation
65
Samsung C&T Engineering & Construction
68
SK Engineering & Construction
71
Demographic Forecast
74
Table: South Korea's Population By Age Group, 1990-2020 ('000)
75
Table: South Korea's Population By Age Group, 1990-2020 (% of total)
76
Table: South Korea's Key Population Ratios, 1990-2020
77
Table: South Korea's Rural And Urban Population, 1990-2020
77
Methodology
78
Industry Forecast Methodology
78
Sources
79
Risk/Reward Ratings Methodology
80
Table: Real Estate Risk/Reward Ratings Indicators
81
Table: Weighting Of Indicators
82

The South Korea Real Estate Report features Business Monitor International (BMI)'s market assessment and independent forecasts of major construction projects in the residential and commercial markets, plus rental prices and yields in major cities. The report critically analyses the prospects for real estate within the broader economic and financial context - both domestic and global - via our econometrically-modelled and clearly explained banking and economic forecasts and follows this through to evaluate the implications for REITs.

BMI's South Korea Real Estate Report provides industry professionals and strategists, sector analysts, business investors, trade associations and regulatory bodies with independent forecasts and competitive intelligence on the real estate industry in South Korea.

Key Benefits

  • Benchmark BMI's independent real estate industry forecasts for South Korea to test other views - a key input for successful budgeting and strategic business planning in the Korean real estate market.
  • Target business opportunities and risks in South Korea through our reviews of latest industry trends, regulatory changes and major deals, projects and investments.
  • Assess the activities, strategy and market position of your competitors, partners and clients via our Company Profiles (inc. SWOTs, KPIs and latest activity).

Coverage

BMI Industry View

Summary of BMI's key industry forecasts, views and trend analysis covering real estate and construction, regulatory changes, major investments and projects and significant national and multinational company developments.

Industry SWOT Analysis

Analysis of the major Strengths, Weaknesses, Opportunities and Threats within the real estate sector and within the broader political, financial, economic and business environment.

Market Overview

Overview of the real estate sector, including analysis of existing/planned real estate developments and emerging industry trends in the office, industrial and commercial sectors.

Market Analysis

Features detailed city-level data and analysis on rental prices, yields, contract terms and real estate availability with separate chapters covering the office, retail and industrial sub-sectors.

Industry Forecast Scenario

Historical data series (2010-2012) and forecasts to end-2018 for the domestic real estate industry and for the local and global finance industry. Indicators include:

Real Estate: Office, retail and industrial real estate yields for all major cities (%); short-term forecasts on minimum and maximum real estate rental prices by sub-sector (US$ per square metre, and local currency per square metre)

Construction: Industry value (US$bn); contribution to GDP (%); employment (`000); real growth (%)

Economy: Economic growth (%); nominal GDP (US$bn); unemployment (%); interest rates (%); exchange rate (against US$)

Business Environment Rankings

BMI's Real Estate Business Environment Rankings provide a country-comparative Risk-Reward Rankings index aimed at investors (real estate vendors, construction companies and financial investors) in the regional real estate market.

The rankings methodology makes sophisticated use of over 40 industry, economic and demographic data points.

Company Profiles

Examines the competitive positioning and short- to medium-term business strategies of key industry players. Strategy is examined within the context of BMI's industry forecasts, our macroeconomic views and our understanding of the wider competitive landscape to generate Company SWOT analyses.

The latest financial and operating statistics and key company developments are also incorporated within the company profiles, enabling a full evaluation of recent company performance and future growth prospects.

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Testimonials

'An essential, multi-faceted research tool. BMI’s thorough understanding of the major market players enables an informed – and informative – review of the sector’s actual performance, together with useful insights into current industry issues, which are topped-off with detailed and invaluable forecasts of industry and macroeconomic trends.’

Senior Research Analyst, ABC International Bank plc