14 Asian Legal Business | January-February 2025 Kang & Partners, points out several significant developments reshaping the property landscape. One of the most notable changes is happening in urban areas, where older neighbourhoods are getting complete makeovers. “Urban regeneration projects in ageing metropolitan areas have gained substantial momentum, creating increased demand for legal expertise in property rights and permit requirements,” says Kang. The residential segment is expected to play a dominant role, with an $8.44 trillion forecast this year spurred by a rising demand for luxury apartments in major cities, according to market data. Meanwhile, after weathering a challenging period, the commercial real estate sector is now showing signs of recovery, aided by potential interest rate cuts. While Korean investors have been somewhat hesitant, this situation has created an unexpected opportunity for international investors to enter the market at attractive prices. “The lack of liquidity within the Korean real estate market, coupled with various factors, including foreign investors retreating from China’s real estate sector, has prompted a shift toward Korea as an alternative investment destination for foreign investors, contributing to a steady increase in foreign investments across both equity and debt financing,” says Sungtae Park, partner at Korean law firm Bae, Kim & Lee (BKL). Hence, the diversification of investment sources, particularly from sophisticated international investors, is expected to not only address the previous liquidity constraints but also introduce advanced investment practices and potentially higher valuations, setting the stage for robust market growth in 2025. Other sectors present a mixed picture. The logistics sector, for instance, faces some challenges with a significant 23 percent vacancy rate, though experts predict gradual improvement, a CRBE report shows. “The logistics market remained active, particularly in transactions involving prime centres and (Nonperforming Loans), despite ongoing challenges related Real estate Property power The South Korean property market is transforming significantly, projected to reach a value of $12.39 trillion by 2025, with foreign investors increasingly shifting attention from China to its North Asian neighbour. Lawyers say that success in this evolving market requires stricter compliance measures and strong adherence to international standards, including comprehensive due diligence processes. By Sarah Wong South Korea’s property market is undergoing a remarkable transformation, characterised by dynamic shifts in market forces, regulatory frameworks, and investment patterns. By 2025, it’s projected to be worth $12.39 trillion, signalling robust growth momentum fuelled by macroeconomic tailwinds and consumer demand. While this sounds promising, this growth story isn’t straightforward. Different sectors of the market are performing at varying levels, creating a complex landscape of opportunities and challenges, according to consultancy CRBE. On the financial aspect, the Bank of Korea is considering lowering interest rates, which could make borrowing more affordable for both domestic and international investors. However, these potential rate cuts aren’t guaranteed – they’ll depend on how both the Korean economy and the global financial markets perform in the coming months. All of that means uncertainty and volatility will likely persist, as well as cloud market development. Sectoral performance Looking at different areas of the market, Kang Dongwon, CEO of Korean real estate boutique firm • Korea’s real estate market is poised for significant growth in 2025 as projected interest rate cuts buoy investors • Foreign investment is rising as investors pull back from China, with mixed performance across residential, commercial, logistics, and hotel sectors
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