The main players in downtown office deals shift from investors to companies

In the downtown office market, control is moving from asset managers and other investors to end-user companies. According to tallies, investment-motivated deals are shrinking under the burden of higher interest rates and expectations of expanded new supply, while purchases by companies seeking to secure their own headquarters are increasing.

In industry tallies for commercial real estate, the share of strategic investors in Seoul and Bundang office deals in 1the first quarter of this year was 61percent by transaction count. That is up from about 4percent in the same quarter last year by 40percentage points.21It was a rise of percentage points.

By transaction value, the share of strategic investors expanded from 20percent in the same period to 36percent. Purchases by companies to secure their own headquarters accounted for 33percent of all office transactions.

By region, in Gangnam, among the transactions 5 of the deals were bought by companies, and in Bundang, of the transactions completed 4 were all taken over by companies. Last year, in the 3 quarter, the Korea Financial Telecommunications and Clearings Institute and Hyundai Card bought their headquarters buildings, and in the 1 quarter, LX Holdings acquired the LG Gwanghwamun Building for 4 hundred million won.5,120,

The industry said that asset managers are taking a cautious approach to building acquisitions because of interest-rate burdens and expectations of increased supply. Meanwhile, companies feeling the burden of rising rent are expanding the share of deals in which they directly buy their headquarters buildings.