Office Market: 'Worst Ever' Since 2023 as Recession Deepens

In the first quarter of this year, the nationwide commercial and office building market entered a general slump, showing a sharp decline in both transaction volume and value, recording its lowest point in approximately two years. According to Real Estate Planet's analysis of real transaction prices from the Ministry of Land, Infrastructure and Transport, the market contraction phenomenon is spreading nationwide. Total transaction volume was 3,148 cases, a 10.0% decrease from the previous quarter, continuing its decline for three consecutive quarters and recording its lowest level since Q1 2023. Transaction value also sharply plummeted by 36.4% from the previous quarter to KRW 6.9757 trillion, showing its lowest level since Q3 2023. Notably, transaction volume decreased in 13 out of 17 nationwide cities and provinces, and transaction value decreased in 14 regions. The fact that there was not a single region where both transaction volume and value increased simultaneously provides evidence of widespread market stagnation. By region, Gyeonggi Province accounted for the largest share in transaction volume with 747 cases. However, in terms of transaction value, Seoul demonstrated an overwhelming presence, occupying 56.5% of the total with KRW 3.9432 trillion. By price range, transactions for buildings under KRW 1 billion accounted for 2,043 cases, or 64.9% of the total, suggesting a market trend centered on small assets. In Seoul, transactions for buildings between KRW 1 billion and KRW 5 billion were active, whereas in provincial areas like Jeonnam (93.4%), Jeonbuk (88.2%), and Gangwon (85.0%), the proportion of transactions under KRW 1 billion was overwhelmingly high. By city/county/district, Hwaseong City in Gyeonggi Province recorded the highest transaction volume with 92 cases, and Gangnam-gu, Seoul, ranked first in transaction value with KRW 1.1923 trillion. The top 5 highest-priced single transactions were all located in Seoul, with the Daishin Finance Center in Jeo-dong 1-ga, Jung-gu, Seoul, recording the highest transaction at KRW 662 billion. Jeong Su-min, CEO of Real Estate Planet, analyzed the contraction in transactions of medium to large-sized buildings and economic uncertainty as the main causes of the market slump. However, he added that there is room for the market atmosphere to shift, citing that monthly transaction volume has risen for three consecutive months and the possibility of interest rate cuts and changes in the policy environment in the second half of the year. Accordingly, this is a time when close monitoring of market trends is necessary.