South Korea Real Estate Report 2017
BMI View: Rental growth will remain flat across the commercial property sector over the mid-term, withpotential for declines in the office sub-sector due to low business confidence and tepid economic growth.
The electronics sector provides some respite, however rising tensions with North Korea and the Chinaboycott will offset this performance and drag on domestic demand, keeping commercial real estate activitysubdued.South Korea's real GDP reached 2.8% y-o-y in H117. This better-than-previously-anticipated performanceis owed to a robust electronics sector, driven by growing global demand for semiconductors and displays.The marked growth in demand will stimulate fixed asset investment in South Korean electronics firms asexports rise, encouraging corporate activity. Nonetheless, the domestic situation continues to be boggeddown by sluggish consumption, persistently high youth unemployment and government instability. Neartermeconomic pressures, including the tentative relationship with North Korea, will see commercialproperty investment activity remain subdued, and we expect rent across the market to keep at current levelsor witness marginal decline.
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