Worldview: South Korea
South Korea distinguished itself among Asia-Pacific countries as the only market to see deal volume increase compared to year-over-year numbers, according to data from Real Capital Analytics. “With Australia, China, Hong Kong, Japan, and Singapore all registering significant double-digit declines in transaction activity, it is slightly unusual to see such a different performance for one market,” says David Green-Morgan, RCA’s managing director of Asia Pacific.
South Korea has not fully locked down its economy during the COVID-19 pandemic, which may account for these positive deal volume numbers. “For much of the first quarter, South Korea was tracking ahead of 1Q2019’s investment tally, even when the number of COVID-19 cases dramatically increased at the beginning of March,” Green-Morgan notes.
Domestic buyers have been the predominant drivers of deal activity in 1Q2020. However, U.S. investors increased their interest in the market in 1Q2020 from the previous quarter — from $641.3 million to $1.4 billion — with U.S. private equity giants KKR and Blackstone reporting investments. With 2Q2020 reporting a slowdown, the rest of the year may have a different story to tell as the full impact of the pandemic is felt. As for property types, “South Korean institutional investors, especially pension and insurance companies, remained focused on Seoul office properties as many of them had done in 2019,” Green-Morgan adds.