CBRE Korea: Commercial Real Estate Investment in H1 2025 Reaches KRW 15 Trillion, Surpassing KRW 7 Trillion for Two Consecutive Quarters

- Q2 investment totals KRW 7.1 trillion, up 53% year-on-year with 11 large-scale office transactions
- Yield spreads across sectors expected to widen due to varying investment demand and risk appetite

July 28, 2025 (Seoul) – CBRE Korea, the world’s largest commercial real estate services company, announced in its Seoul Figures Q2 2025 report released on July 22 that South Korea’s commercial real estate investment volume reached KRW 7.1 trillion in the second quarter of 2025, up approximately 53% from the same period last year. This marks the second consecutive quarter with investment volumes exceeding KRW 7 trillion. The cumulative investment volume in the first half of the year amounted to approximately KRW 15 trillion, surpassing 70% of the total annual investment volume recorded in 2024.

The office sector was at the core of this investment expansion. Approximately KRW 6 trillion, or 85% of total Q2 investment, was concentrated in office assets, driving overall market activity. Of these, 11 transactions exceeded KRW 100 billion, totaling around KRW 5.5 trillion, mainly in the CBD and Gangnam districts. Major transactions included SI Tower, KDB Life Tower, Crescendo Building, and BNK Digital Tower. Notably, strategic investors (SI) such as CJ Group, Hyundai Motor Company, and Bithumb actively acquired office buildings for their own use.

The average vacancy rate for Grade A office buildings in Seoul remained unchanged from the previous quarter at 2.7%. The Gangnam area and Yeouido saw decreases of 0.4 percentage points and 0.2 percentage points, respectively, continuing their stable trends. In the CBD, vacancy increases in some assets were partially offset by stable performance in prime buildings. Net effective rents rose 2.1% quarter-over-quarter to KRW 37,248 per square meter, while face rents increased 2.3% to KRW 39,599 per square meter. In the Gangnam area, strong relocation demand from finance and IT companies led to rapid absorption of vacancies in major prime office buildings. In Magok, new demand from companies such as DL Group and firms in the aviation and financial sectors continued to strengthen the district’s position as an emerging business hub.

The retail sector maintained its recovery momentum, supported by improving consumer sentiment and increased demand from foreign tourists. The Consumer Sentiment Index in June reached 109, the highest level since 2021, and the number of inbound foreign visitors in the first half of the year reached 7.2 million, a 15% increase year-on-year. As a result, major brands such as Olive Young, Alo, and Lululemon expanded their presence in key retail areas like Gangnam, Dosan-daero, and Seongsu. Vacancy rates declined and rental levels increased in areas such as Myeong-dong, Hongdae, and Hannam-dong, reflecting a general recovery trend in high street retail. Demand for retail space in large office arcade assets, such as Magok One Grove—which has already secured more than 90% lease agreements—also stabilized rapidly.

Logistics transaction volume in Q2 amounted to KRW 296.7 billion, representing a temporary 84% decline compared to the previous quarter. This was mainly due to a base effect following a surge in forward purchases and distressed asset deals in Q1. Transaction volume is expected to rebound in the second half, led by foreign institutional investors. On the supply side, new deliveries of Grade A logistics centers in the Greater Seoul area totaled only 168,614 square meters, marking the lowest quarterly supply since 2019. As of the first half, the vacancy rate stood at 20.4%, down 2.5 percentage points from the end of 2024. Demand for dry warehouses remained stable with leasing activities from tenants such as Musinsa and Lotte Global Logistics, while demand for cold storage assets showed signs of gradual recovery in areas like Icheon and Yangju.

Investor interest in hotel assets remained solid amid the ongoing recovery in tourism demand, limited new supply, and rising development costs. In Q2, Goldman Sachs made its first hotel investment in Korea by acquiring the Mercure Ambassador Hongdae Hotel for KRW 262 billion. Shinhan Seobu T&D REIT also purchased the Shilla Stay Mapo for KRW 143 billion. As the recovery in tourism demand continues alongside ongoing limitations in new supply, investment demand for hotel assets is expected to remain solid for the time being.

Claire Choi, Senior Director, Head of Research at CBRE Korea, stated, “The second quarter marked a solid period of recovery in the commercial real estate market, driven by both strategic occupier acquisitions and selective approaches from foreign investors. While interest rate stabilization is expected in the second half under a more accommodative monetary policy, yield spreads are likely to widen across asset types depending on investor profiles and risk preferences.”