RESEARCH • October 2023

South Korea 101: Seoul far, so good?

The South Korean real estate market has drawn significant investor attention over the last few years. In the initial phases of the pandemic, the relative merits of the Korean market were clear, with a standout performance in returns and capital flows. As we put the pandemic further behind us and move towards the end of 2023, sentiments have shifted somewhat in response to the higher interest-rate backdrop.


Testing times

The reality is, we are living in unusual times. Pricing is under pressure and debt is non-accretive to real estate investments in most property markets today, with South Korea being no exception. It is doubtful that we will see borrowing costs revert sharply to pre-COVID levels, although rates should normalize over time. Unlike some investment managers, we are not convinced investors can simply ‘look through’ the current conundrum and adopt a waiting game. In fact, this is the new paradigm we must grapple with globally.  

It is reasonable for global investors to look to the United Kingdom and the United States as the canaries in the coal mine, and expect property valuations in Asia Pacific to come under similar pressure, if not more. We do not disagree, but we are also convinced that a sweeping characterization of outcomes will not apply across different markets in Asia. Here we delve into the prospects for South Korea and assess the prospects for this dynamic economy.





Research & Strategy