Investment in South Korean commercial real estate will remain upbeat this year, with total transactions exceeding 10 trillion won ($8.4 billion), according to leading US-based commercial real estate service provider CBRE on Tuesday.

This anticipated yearly figure falls lower than the record-high 16 trillion won seen in 2019, but was on a par with the country’s five-year average.

“Record-low interest rates and global economic instability are leading individual investors to focus on alternative asset classes, including real estate,” said Don Lim, managing director of CBRE Korea, citing the company’s Real Estate Market Outlook 2020 Report.

Logistics facilities, data centers and rental houses are especially likely to gain popularity this year amid the government’s efforts to foster public investment, he added.

“The supply of new logistics centers this year will consist of mixed developments comprising dry and cold facilities,” said Clare Choi, head of research at CBRE.

With ongoing projects in parts of Gyeonggi Province such as Icheon, Yongin and Anseong, new landlords are offering longer rent-free periods to cope with elevated market competition. This unprecedented trend has led to a balance of power that favors tenants, Choi explained.

Also, Grade A office space is expected to expand 730,000 square meters this year, up almost 300 percent on-year. While this supply will drive a short-term rise in vacancy rates in Seoul’s central business district and the business district of Yeouido, the steady expansion of firms that specialize in IT, finance and other professional services will ensure net absorption, the report predicted.

By Bae Hyun-jung (tellme@heraldcorp.com)