The price of this business forecast report covers 4 quarterly reports on this country. This quarterly report will be downloadable instantly as a PDF document, with the 3 remaining reports delivered at regular intervals throughout the year.
The South Korean real estate sector is back under the spotlight, and is likely to remain so for some time to come. The nation's successful bid for the 2018 Winter Olympics will see a renewed focus on the sector over the coming years in the lead up to the main event. More-likely-than-not, South Korea will also see a general increase in tourist arrivals as a result. In turn, this trend will prove to be a long-term boon to the construction and property industries. All of this, of course, will be taking place under the watchful eye of the investment community, in South Korea and overseas. In light of this, BMI has updated its quarterly
South Korea Real Estate Report accordingly to meet this heightened interest in the sector. Prior to the start of 2012, BMI's outlook for the South Korean real estate sector was rather subdued for 2012, with our sources predicting slow growth across the board. Broadly speaking, Q112 has seen the sector continue on a trajectory close to our expectations. BMI notes, however, that there have been some changes. With economic growth continuing to decelerate – with the Q411 real GDP growth figure estimated by Bloomberg to have fallen to as low as 0.5%, from 0.8% in Q311 – BMI has once more downgraded its forecast for full-year GDP growth to just 1.9% for 2012, from what originally started as 4.2%. GDP growth came in at 3.7% y-o-y in 2011. The combination of the country's exposure to a slowdown in export demand, triggered by the European debt crisis, an unsteady US economic picture and weakening Chinese demand, are taking their toll on South Korea. Despite the macroeconomic headwinds, however, BMI is still forecasting a return to positive growth for South Korea's construction sector, with real growth for the sector forecast to reach 3.2% in 2012. What is more, the domestic situation may well be balanced out by resilient consumer spending amid a strengthening employment market and planned fiscal spending by the government in areas such as infrastructure, owing largely in part to the 2018 Winter Olympic Games.
BMI's view remains that the real estate industry is simply staying the path until the macroeconomic headwinds have passed, safe in the knowledge of its own solid – if not as exciting – long-term potential.
Busan and Daegu are cities with very different stories to Seoul; they are both recovering after years of declining economies and waning traditional industries. While little may have changed on a sector-wide level since BMI's last quarterly update, there have been key developments for some of South Korea's leading real estate players, however. GS Engineering & Construction Corporation and Samsung C&T Engineering & Construction have made significant steps on their long-term roadmap towards global expansion over the past few months, with the former announcing a KRW5trn investment drive and latter boasting two major contract wins since the turn of the year.
- The 2018 Winter Olympics and a general upward trend in tourist arrivals could provide a longterm boon to the construction and property industries.
- The South Korea-United States free trade agreement is likely to provide greater export opportunities for the Korean manufacturing sector in the medium-to-long term, which could filter down to greater retail and hospitality real estate demand and uptake.
- Seoul's high-grade office space is expected to provide tenant-friendly rental rates for quality space to the end of 2012.
- The strengthening macroeconomic headwinds and decelerating economic growth could weigh on investor interest in the sector in the short term.
- Ailing demand from Korea's largest export partners and a fragile global economic outlook in 2012 offer little comfort to the export-dependent economy.
- Weakness in the residential building industry will remain a drag on overall construction industry growth.
Click for Report details:South Korea Real Estate Report Q3 2012