Seoul Office Market Beats Q1 2019
GDP growth decelerate
With South Korea’s economy expected to continue decelerating in 2019, inflation will remain below target while the unemployment rate is unlikely to substantially improve as concerns of a protracted slowdown and uncertainties related to the U.S.- China trade dispute hurt sentiment. Seoul’s office occupier market continues to remain tilted in favor of the tenant.
Vacancy fell for second straight quarter
The average vacancy rate of grade A office buildings in Seoul dropped for a second straight quarter as availabilities in the three business districts of the CBD, GBD and YBD fell marginally to 9.1% in Q1 2019. This can be mainly attributed to a combination of little to no new supply during the quarter as well as rapid absorption of availabilities in YBD due to aggressive marketing.
CBD to bear brunt of supply
Two sizable office buildings are scheduled to be delivered in Q2 2019, which is expected to elevate vacancy rates. New supply of grade A office buildings in GBD and YBD will be limited this year, which should see vacancy rates in these markets tightened. However, economic growth remains the wildcard for the office occupier market this year.