The COVID-19 pandemic significantly impacted inbound real estate investment in Korea in H1 2020, with just USD 400 million worth of deals concluded, a decline of more than 50% y-o-y on the same period of 2019. Although lockdowns and travel restrictions have inhibited purchasing activity among overseas buyers, many groups retain a strong appetite for Korean commercial real estate.
Purchasing activity among foreign investors in Korea in H1 2020 mainly involved logistics properties but the period also saw the completion of one major retail deal. While foreign investors will continue to seek investment opportunities over the remainder of the year, the ongoing pandemic will inhibit overall investment volume.
The pandemic also constrained Korean outbound investment in H1 2020, with transaction volume falling by almost 60% y-o-y to USD 2.5 billion. Most deals involved relatively stable assets such as office and logistics facilities.
While full-year outbound investment volume will decline on a y-o-y basis due to the pandemic, CBRE expects that capital originally allocated by Korean investors for overseas acquisitions will be moved to the domestic market, resulting in stronger competition among buyers and lower cap rates.