Seoul's Office Space Boom: 98% occupancy reflects cultural shifts in post-pandemic work

In Seoul, more than 98% of top-tier offices are currently occupied as white-collar workers return to the office post-pandemic. The heightened demand for office space has resulted in a 15% increase in rental prices over the past year. According to Claire Choi, the head of research for Korea at Global Commercial Real Estate Services (CBRE), this trend is attributed to cultural factors. This is to say that when Koreans are asked to come to office, they will do so. In the summer of 2021, a survey conducted by the Korea Enterprises Federation (KEF) revealed that 91.5% of the country’s leading firms were implementing a work-from-home (WFH) policy. However, as the Covid-19 situation improved, the availability of remote work decreased, with now less than 60% of major companies permitting employees to work remotely, according to KEF. Among the 40% of companies still allowing remote work, almost two-thirds do so selectively. Nowadays, the predominant telework method involves either identifying individuals requiring home-based work or approving it selectively through submitted applications. Since 2021, there has been a widespread scarcity of office space which is attributed to government restrictions on redevelopment and construction disruptions due to the pandemic. As ongoing construction projects are completed, the supply side may get a bit relaxed by 2025. South Korea’s economy recorded growth during most of the pandemic due to strong overseas markets for its products including microchips and cars. Local companies make up about 80% of tenants in the commercial market, so even if foreign companies downsize, the overall need for space remains. Additionally, the consistent growth of the Korean economy has contributed to increased international and domestic investments. So, the demand is likely to be maintained. This is significant given the scenario in Western nations, where offices are seeing tenants cut space or move out as employees are reluctant to come to office. Property prices are crashing there and the commercial real estate market of the US faces at least nine more months of decline, as per latest research. The present boom in Seoul’s real estate just goes to show the Asian market operates very differently. It also reflects that investors expect rental yield and income in South Korea to grow over time.

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Seoul's Office Space Boom: 98% occupancy reflects cultural shifts in post-pandemic work

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