South Korea real estate transactions decline amid rising commercial vacancies

South Korea's real estate market saw a contraction in August, with total transaction volumes falling for the fifth consecutive month. According to data from the Ministry of Land, Infrastructure and Transport, the total number of transactions dropped 14.3% from the previous month, and the total transaction value decreased by 23.1% to 28.85 trillion won.

While overall activity slowed, specific sectors showed divergent trends. Transactions for general factories and warehouses saw a 41.1% increase in value despite a 14.9% drop in volume. Conversely, Seoul's apartment market experienced a significant downturn, with both transaction volume and value decreasing by approximately 40%.

In the commercial sector, vacancy rates for general stores have exceeded 13%, marking the highest level since 2021. To address issues where landlords bypass the 5% rent increase cap by hiking management fees, a revised Commercial Building Lease Protection Act has taken effect. The law now mandates the disclosure of 14 specific management fee items, such as cleaning and security costs, to prevent opaque fee increases and provide transparency for small business tenants.