Office Best Investment Item for 2010
By Yoon Ja-young
Staff Reporter
Upscale office buildings in the capital's central business district and southern Seoul will be the best investment item in the country's real estate market this year, a global real estate investment management company predicted.
``Key business districts, which include the central business district and Gangnam, are the markets where we keep looking for investment opportunities,'' said Kenneth Tsang, regional director in charge of the Asia Pacific region at LaSalle Investment Management.
LaSalle is a global real estate investment company with $39.9 billion of assets under management, among which $7.6 billion are invested in the region.
Korea takes 7 percent of its Asia Pacific portfolio, including the Hyundai Merchant Marine building it possesses in downtown Seoul and the Samsung SDS building in Bundang, Gyeonggi Province.
LaSalle, which positively evaluates the economic recovery in Korea, is especially optimistic about prime office buildings. It noted that Korea had only around a 4-percent vacancy ratio for prime office buildings despite the global financial crisis.
Regarding the government's development project in Songdo, however, LaSalle was reserved.
``Regarding the Songdo situation, it's still too early to say. That area is being developed. In many cases we have seen new business districts emerge, but it normally takes time for the market to mature,'' said Jacques Gordon, international director at LaSalle.
He added that international developers are very cautious following the troubles at Dubai World. Instead of a high-risk, high return strategy, investors are going back to ``real estate as a stable income strategy.''
``The Korean government loves to create multi sites of economic activity beside Seoul. That's great. But these kinds of investments will be led by the government and local investors,'' he said.
LaSalle positively evaluates Korea's deregulation on foreign investors. ``We have a transparency index and Korea's transparency on the world stage has been rising each year,'' Gordon said. The index includes evaluation on taxation, and whether international investors are getting a fair deal.
``My impression is that Korea is very attractive to international investors. Your property rights law is very strong, investors feel comfortable here.''
He advised that individual investors can expect between a 9- and 11- percent investment return amid international real estate recovery by investing in global real estate securities.
He said the country's national pension fund made the right decision when it purchased office buildings overseas following the global crisis.