Liquidity and low interest rates boosted commercial real estate investment returns in the second quarter of this year

[이코노믹리뷰=권일구 기자]The return on investment in offices and medium-large/medium-sized/small/collective shopping malls all increased compared to the previous quarter. The asset value has risen thanks to the inflow of investment demand from abundant liquidity and low interest rates.

The Korea Real Estate Agency announced on the 28th that it surveyed and announced trends in the rental market such as rental price index, investment return, and vacancy rate in the second quarter of `21 as of June 30 for commercial real estate nationwide.

Source = Korea Real Estate Agency

Commercial real estate across the country is divided into four building types: offices (general 6 stories or more), medium-large shopping malls (general 3 stories or more or total floor area exceeding 330 m2), small shopping malls (general 2 floors or less and total floor area 330 m2 or less), and collective shopping malls. investigated.

In terms of rent, the rent of a collective shopping mall (27.000 won/m2) was the highest, followed by medium-large shopping malls (25.5-won/m2) and small shopping malls (19.1,000 won/m2). On the other hand, the office space was found to be at the level of KRW 17.1 thousand/m2.

Source = Korea Real Estate Agency
Source = Korea Real Estate Agency

The return on investment, which shows the investment performance of holding real estate for three months, is calculated by adding the return on income and return on capital. Offices are 2.15%, medium and large shopping malls are 1.75%, small shopping malls are 1.56%, and collective shopping malls are 1.78%.

Income yields such as rental income for 3 months were 0.99% for offices, 0.87% for medium and large shopping malls, 0.80% for small shopping malls, and 1.04% for collective shopping malls. The return on capital, which indicates the change in asset value, was found to be 1.16% for offices, 0.88% for medium and large shopping malls, 0.76% for small shopping malls, and 0.74% for collective shopping malls.

Although the income yield fell due to a decrease in rental income due to the continued Corona 19, the asset value rose due to the inflow of investment demand due to abundant liquidity and low interest rates, and the return on investment in all types rose from the previous quarter.

As for the vacancy rate, 11.1% for offices, 13.1% for medium and large sized units, and 6.4% for small businesses.

Offices are less affected by COVID-19 than shopping malls, and vacancies have increased slightly, mainly in old offices in rural areas.

In addition, due to the worsening of business due to the continued intensive social distancing, business closures increased and new rental demand decreased.

Meanwhile, the commercial real estate rental trend survey in the second quarter of 2021 was commissioned by the Ministry of Land, Infrastructure and Transport to the Korea Real Estate Agency, and about 320 appraisers and professional investigators conducted on-site surveys, including local visit surveys and interview surveys with landlords and tenants.

Commercial real estate rental trend survey information is surveyed and published every quarter, and can be checked through the Real Estate Statistics Information System of the Korea Real Estate Agency, Statistics Nuri of the Ministry of Land, Infrastructure and Transport, the National Statistical Portal of the National Statistical Office, and the Real Estate Information App of the Korea Real Estate Agency.

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