Prime office transactions in South Korea’s capital city of Seoul came to 4.6 trillion won ($4.13 billion) during the third quarter of 2020, as real estate investors have searched for safety in times of ongoing uncertainties, data showed Monday.

This surpassed the 4.2 trillion-won figure for the first half of 2020, according to data compiled by commercial real estate services firm Savills Korea. If combined, the transaction of the January-September period took up 75 percent of the yearly volume in 2019, in an apparent sign of market recovery and demand for prime offices.

“The heightened interest for stable prime office investment is in line with growing risk sentiment arising from macroeconomic uncertainties,” wrote JoAnn Hong, head of research at Savills Korea.

The closing of a few large transactions, including Pinetree Asset Management’s 939.9 billion-won acquisition of SG Tower, Mastern Investment Management’s purchase of CenterPoint Donuimun for 666.3 billion won and Korea Real Estate Investment & Trust’s 360.5 billion-won purchase of the Hyundai Marine & Fire headquarters in Gangnam, were pushing the new unit transaction price to the peak.

However, lower demand levels due to the COVID-19 pandemic fallout in selective industries, coupled with a new 533,000 square meters of prime office supply from development projects including SG Tower, Parc 1 and KB Financial Town by year-end might “further depress market dynamics,” Hong added.

On the other hand, total commercial real estate transactions for the third quarter hit a record high at 6.3 trillion won, up 123 percent on-quarter, with the increased demand for office and logistics assets, according to an estimate by CBRE Korea.

This stems from faster-than-expected economic growth -- 1.9 percent on-quarter in the third quarter -- that is anticipated to “instill greater confidence into real estate investors and occupiers in the coming months,” wrote Claire Choi, head of Korea research at CBRE Korea.

While Korea appears set for a faster than expected return to growth, macroeconomic issues surrounding the US election and a potential wave of the pandemic may continue to cloud the outlook, Choi added.

By Son Ji-hyoung (consnow@heraldcorp.com)