Twin office towers under construction in Seoul, worth an estimated 1.1 trillion won ($1 billion), have attracted Blackstone Group, Korea Post and five to six other bidders by the Feb. 27 deadline, which looks set to be the country’s largest property sale in the first half of this year.
A lack of new prime office space in the central business district of Seoul and a planned redevelopment of the surrounding areas as historic and cultural quarters fanned interest in the 26-story buildings, despite a pick-up in the vacancy ratio of large office buildings across Seoul.
Korea Post teamed up with Millinium Inmark Asset Management Co. Ltd., a joint venture between two Australia-based companies to bid for Centropolis Towers owned by domestic developer CTCore, according to real estate industry sources.
Other bidders include IGIS Asset Management Co. Ltd., South Korea’s biggest real estate management company, Mastern Investment Management Co. Ltd. and Pacific Investment Management Co. Ltd.
Those South Korea-based asset managers are understood to join forces with domestic and foreign institutional investors such as NH Investment & Securities Co. Ltd. and KB Securities Co. Ltd. But no further details were immediately available about whom they partnered with.
For private equity group Blackstone, a possible acquisition of the office towers would be its second office building investment in South Korea since it bought 62,747-square-meter commercial property in Seoul, Capital Tower, for 450 billion won in 2016. It lost a tender for IFC Seoul to Canada-based Brookfield in the same year.
The construction is scheduled to be finished by June 2018.
The property sale, managed by Savills Korea and Mateplus, is expected to fetch 27 million won per 3.3 square meters, one of the highest unit prices for a South Korean real estate transaction.
It comes shortly after KKR & Co., Hong Kong-based Lim Advisors and Korean Teachers’ Credit Union sold K-Twin Towers, 16-story office towers, to Samsung SRA Asset Management Co. Ltd. for around 700 billion won in December. The sale price was 200 billion won higher than what they paid in 2014.
Centropolis Towers, 113.8m tall, seems to be the only new commercial building of that size in the district over the next few years because of the height limits of 90m within the CBD in northern Seoul.
The space up for sale is 134,310 square meters, excluding the first basement level to be donated to the Seoul Metropolitan City.
It is in the proximity of a subway station and next to Jongno Tower, a 33-story office building, which houses South Korea’s biggest Starbucks store covering 1,100 square meters.
With big companies moving to new office buildings in the west and south of Seoul, the average vacancy ratio of large office buildings in Seoul rose 0.2% points to 11.7% in the fourth quarter of 2017 from three months earlier, according to JLL, a real estate services firm.
Rent declined 1.5% points to an average 88,467 won per 3.3 square meters during the period.
By Daehun Kim
<Edited by Yeonhee Kim>