 Sanjay Verma poses in the Cushman & Wakefield office in central Seoul, Tuesday. / Korea Times photo by Shim Hyun-chul |
Seoul’s real estate demand for Western-style shopping malls and hotels for businessmen and tourists will see a big increase in the coming years, says the Asia Pacific head of Cushman & Wakefield, a global real estate firm.
But its office market faces a short-term oversupply as major building projects are to be finished within a year and a half, said Sanjay Verma in an interview last week during a visit to Seoul.
“If you look at the Korean shopper’s profile, it’s quite fascinating that the general shopper here is more conducive to Western brands and the Western style of shopping than in any other Asian markets,” Verma said.
“When brands such as such as Zara, H&M and Gap come here, the shoppers adapt to these brands very quickly. This means that you will see more action like that. The retail sector from the perspective of investment is very attractive.”
Over the past few years, the Korean fashion market has seen changes. It no longer depends on the customer-drawing power of large department stores such as Lotte and Shinsegae. Several mid-end foreign fashion brands such as Zara, H&M, Gap, Uniqlo and Massimo Dutti have opened independent stores in Seoul and a few other cities. Most of them have seen rapid growth, which has encouraged other brands to tap into the Korean market.
The retail culture in general has been changing to a more Western style. Large-scale shopping malls and outlets have only recently opened on the outskirts of Seoul. To serve the increasing demand from international retail brands, Cushman & Wakefield is increasing its staff in Seoul and is planning to launch a business concentrating on shopping center management, he said.
The fast-speaking Indian CEO said another interesting property class in terms of investment opportunities is the hotel sector.
“My feeling is that hospitality will be a growth area, since the traffic of travelers is increasing,” he said, adding that few international developers have paid attention to this sector in Seoul.
On the contrary, the owners of office buildings will have to face a supply overhang for the next year or two, he said.
“The office market, in the short run, probably has lost its flavor. Today it’s the tenants’ market and we expect this will continue for some time.”
But in the long run the picture is not so bad, as economic growth will easily absorb any surplus in the office space, he predicted. Cushman & Wakefield estimates that Seoul’s three major business districts — Gwanghwamun, Gangnam and Yeoido — have 3.5 million square meters of office space in total, compared to 20 to 30 million square meters in New York, London or Tokyo.
“Our mid- to long-term outlook for Seoul is equilibrium. It’s not going to be like Dubai, where there is no real demand,” Verma said.
Overall, Korea is attractive for its macro-economic conditions as well, he said - it’s not having a “steroidal growth” like India or China and yet it is not under a dark cloud like Japan is, while it also has the benefit of a big population unlike Hong Kong or Singapore.
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