South Korea Real Estate Report

Published 13 October 2014

  • 82 pages
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$1,295.00
South Korea Real Estate Report

BMI View: South Korea possesses a well developed commercial real estate sector that is supported by a robust financial sector as well as an increasingly affluent population. The country's economy, however, has experienced a sluggish recovery and this is temporarily holding back the overall potential of the sector. While we do not expect to see any real changes to rental rates across all the office, retail and industrial sectors during 2015 and 2016, the South Korean commercial real estate sector does have considerable potential in the long term.

Seoul's reputation as a regional financial hub is helping ensure strong demand for office space. Existing companies are generating much of the new demand through their expansion plans. The recent sale of the Korea Electric Power Corporation's (KEPCO) Gangnam headquarters to Hyundai Group will lead to new supply of office space in one of the city's most sought after business areas.

The retail sub-sector possesses the potential to become a long-term out-performer. The country's affluent population possesses growing consumer confidence despite sluggish economic improvements and this will support demand for retail space, especially beyond Seoul's competitive high streets. Growing tourist numbers will further help prop up demand for retail space. We believe that, despite the current fluctuations in rental and vacancy rates, the long-term outlook for South Korea retail real estate is one of solid growth.

Global economic headwinds are playing a major role in dampening the prospects of the country's manufacturing sector and industrial output. Uncertainties within the industrial real estate segment will therefore persist throughout the coming year or two. Nonetheless, South Korea's highly skilled labour force as well as government initiatives are helping move the sector towards highly innovative, value-added industries. As such, the long-term potential for the industrial sector and its real estate appears promising.

The South...

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 BMI Research'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.

Industry Forecasts Outlook

Historic data series (2010-2013) and forecasts to end-2019 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 (USD per square metre and local currency per square metre).
  • Construction: Industry value (USDbn); contribution to GDP (%); employment (‘000); real growth (%).
  • economy: Economic growth (%); nominal GDP (USDbn); unemployment (%); interest rates (%); exchange rate (against USD).

BMI’s Real Estate Risk Reward Index

BMI’s Risk Reward Indices provide investors (real estate vendors, construction companies and financial investors) looking for opportunities in the region with a clear country comparative assessment of a market’s risks and potential rewards. Each of the country markets are scored using a sophisticated model that includes more than 40 industry, economic and demographic data points to provide an indices of highest to lowest appeal to investors, with each position explained.

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.

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.

*Company profiles are not available for every country. Those reports instead contain information on the current activities of prominent companies operating in the market.

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