Commercial building transactions plummet to 2008 financial crisis level

In October, commercial building sales in Seoul plunged to the level of the 2008 global financial crisis.

According to an analysis of actual transaction price data from the Ministry of Land, Infrastructure and Transport by Realty Planet, a commercial real estate firm on Tuesday, only 80 commercial and office building sales were recorded in Seoul in the month of October.

"This is the lowest level since the bankruptcy of Lehman Brothers in September 2008, showing fewer than 100 transactions per month, including 88, 50, 69, and 61 transactions for four months from October of that year to January in the following year," said a Realty Planet official.

This is the first time, except during the financial crisis, that the number of commercial building sales has fallen to two-digit figures since 2006 when the land ministry started compiling statistics on actual transactions.

The building sales market has averaged at least 200 to 300 transactions per month every year, enjoying a boom along with rising residential housing prices.

In the first half of this year, the monthly average was 247 cases, but gradually declined to 167 cases in July, 155 in August, and 117 in September, and then plummeted to 80 in October. This is one-third of the 262 cases in the same month of the previous year.

The Gangnam business district is the area in which the transaction volume has decreased most steeply for the year. Only 15 transactions were recorded in October. The number of cases decreased by 74.6% compared to 59 cases in the same month of the previous year, showing the largest decline among the three major business districts in Seoul.

It was followed by a 71.7% drop in the downtown business district in Jongno and Jung-gu, and a 68.4% fall in the Yoido business district.

As of October, the volume of sales of commercial and office buildings in Seoul was 1,360 billion won ($1 billion), down 34.3% from 2,070 billion won for the same month of the previous year.

"As the global economic downturn and the benchmark rate hike continue, the domestic commercial and office building sales and the transaction market are being hit hard," said Jeong Su-min, CEO of Realty Planet.

Write to Jong-Pil Park at jp@hankyung.com