CapitaLand in exclusive talks to buy Gangnam Office Tower from South Korea’s NPS for $320 million

Seoul continues to emerge as Asia’s hottest office real estate market, with Singapore’s CapitaLand Investment now acquiring a tower in the Gangnam business district owned by South Korea’s NPS for 440.8 billion won ($320 million) It is reported that they are in the final stages of negotiations.

CLI is currently in possession of the Golden Tower office building after being selected as the preferred bidder for the 21-storey asset by real estate fund manager Columco, which holds the property on behalf of the world’s second-largest pension fund, according to reports. The company is said to be in exclusive negotiations regarding. said market sources who spoke to Mintyandi on Friday.

According to local news site Seoul Property Insight, the Singapore real estate giant has partnered with local lender KB Bank for the acquisition, with both partners signing a memorandum of understanding to purchase Golden Tower on May 9. A sales contract is expected to be signed soon.

If the Golden Tower deal goes through, it would be the latest in a series of Seoul office deals this year, with investors raking in 1.6 billion won for desk space in the South Korean capital in the first quarter, according to MSCI Real Estate. . Analysts say tight vacancies in the city and rising rents are attracting investors.

“Seoul is far from the only major office market in the world with low vacancy rates and rising rents and prices,” Benjamin Chow, head of Asian real estate research at MSCI, told Mintiandi on Friday. It may be one of the few.” “The market’s strong fundamentals continue to attract investor interest from a wide range of sources, including domestic institutions, corporations, and even non-profit organizations.”

equal partners

CLI and KB Bank are said to be 50:50 partners in acquiring the 40,479 square meters (435,712 square feet) property for the equivalent of 10.9 million won per square meter, which is higher than Columco’s asking price in the previous marketing campaign. About 10 yen lower. A year in which no sales were made.

Columco, which also uses the building at 144-17 Samseong-dong as its headquarters, has been working with local investment firms Daishin Asset Trust and Mastern Investment Management for Golden Tower after first putting the asset on the market in July. It is believed that negotiations have been held. Last year’s asking price was 490 billion won.

NPS worked with Columco to acquire Golden Tower from Samwa Kaihatsu in 2008 for 252.8 billion won. Following that transaction, Columco carried out renovations to the vintage 1995 property, which is now home to local financial company CNH Co. Occupiers of other companies.

Mingtiandi reached out to CLI and KB Bank for comment, but had not yet received a response as of press time. Deloitte is understood to have advised on the deal.

The transaction will increase CLI’s exposure to its Korean office. Sold Citibank Center last year Based on the company’s recent announcement, Seoul will sell for S$167 million (currently $124 million). Business updates. The company’s only remaining office property in the South Korean capital is the 14-story Jongno Place in Jongno-gu, according to its 2023 annual report.

In the case of KB Bank, after the bank’s affiliated funds partnered with funds managed by Keppel Land and Keppel Capital to acquire the Seoul office, the joint venture again partnered with Singaporean investors to acquire the Seoul office. Become. 15-story Samphan Building It will be built in Jongno-gu in December 2022 for 220 billion won.

Office departments that enhance work culture

Judy Chan, research director at Colliers (Seoul), said that despite rising global office vacancy rates, South Korea’s strong work culture keeps offices in Seoul’s major commercial hubs occupied. The property is said to have few vacancies, ensuring stable profits for investors.

“In contrast to North America and Europe, remote work rates are low in South Korea. Among Asian countries, South Korea has the highest average office occupancy rate for office workers, and the rental market continues to thrive,” said Chan. told Minty Andy on Friday.

colliers data According to , the average vacancy rate for Grade A offices in Seoul’s three major business districts was 2% in the first quarter, with Gangnam ranking as the tightest market at 1.5%. Last quarter, Grade A office rents in major business districts averaged 35,303 won per square meter per month, an increase of 0.8% compared to the previous three months.

Mr. Chan said investors are looking to secure parts of Seoul because the rental market is tight despite an expected surge in new supply through 2026.

“Investors continue to show interest in the market. In particular, high-quality, stable assets with adjusted prices are at the heart of these deals. Investment volumes in 2024 will increase slightly compared to the previous year. “That’s expected,” she said.

Golden Tower is three train stops from Ark Place, a renovated office tower at 142 Tehran Road. Columco purchased from Blackstone 792 billion won in March.

The Teheran Road area was the epicenter of real estate transactions during the quarter, with Hanwha Asset Management selling T412 Tower on the same street in Gangnam for 20 million yen. 330 billion won, the transaction will also take place in March.

In the same month, IGIS Asset Management acquired Metro Tower in Seoul’s central business district from a fund backed by Toyo Life Insurance for 415.6 billion won.