Commercial real estate deals in South Korea are stalling at the closing stage as senior secured loan rates for office buildings rise to 5.1-5.3%, according to financial investment industry sources on September 3. The rate increase — from 3.8% at the end of last year and 4% early this year — represents a jump of over 100 basis points, creating a widening gap between sellers' price expectations and buyers' financing capacity. The rate hikes stem from the Bank of Korea's interest rate policy, with multiple office buildings including Anam Tower and Suseo Rose Dale now re-entering sales processes after failed transactions.
Senior Secured Loan Rates Jump to 5.3%
Senior secured loan rates used in actual office market transactions rose to 5.1-5.3% recently, according to financial investment industry sources on September 3. This represents an increase of over 100 basis points from 3.8% at the end of last year and 4% early this year. The 1 percentage point rise in loan rates carries significance beyond simple financing cost increases for real estate investors. Higher loan interest reduces investment returns, which in turn lowers the price buyers can afford to pay. This creates a growing gap between sellers' desired prices and the funds buyers can raise.
Anam Tower and Suseo Rose Dale Resume Sales Processes
Anam Tower, located at 702-10 Yeoksam-dong, Gangnam-gu, Seoul, is a building with 6 basement floors and 20 above-ground floors, totaling 44,083.78 square meters (approximately 13,335 pyeong) near Seolleung Station on subway line 2. Hanwha Asset Management pursued a sale of this asset in 2023. NH REITs Management pursued acquisition at approximately 35.97 million won per 3.3 square meters at that time, but the transaction did not materialize. Capstone Asset Management was recently selected as the preferred bidder, and the sale is proceeding again.
Suseo Rose Dale underwent multiple sale processes. Located at 280 Gwangpyeong-ro (724 Suseo-dong), Gangnam-gu, Seoul, this large-scale mixed-use facility has 8 basement floors and 20 above-ground floors with total floor area of 97,526 square meters (approximately 29,501 pyeong). The lower floors (basement 1 to above-ground 10 floors) consist of large offices, while upper floors are officetels. The sale target is the office portion from basement 1 to above-ground 10 floors, approximately 55,462 square meters (approximately 16,777 pyeong). Intrust Investment Management's sale of this asset was pursued in 2022 and 2024, but the 2022 process was withdrawn at the advisory firm selection stage. Stick Alternative Asset Management was selected as preferred bidder in August at approximately 27 million won per 3.3 square meters.
Failed Transactions Prompt Advisory Firm Changes
Sangam IT Tower, owned by CAC Asset Management, experienced a failed transaction before finding a new buyer. Located at 434 World Cup Buk-ro, Mapo-gu, Seoul, the building has 5 basement floors and 12 above-ground floors with floor area of 46,152.27 square meters. A sale was pursued last year, but Korea Land Trust's acquisition did not materialize. Korea Investment Real Estate Trust was selected as preferred bidder this year, and deal closing is now approaching.
Beneforce Seongsu, under development by project operator Beneforce, pursued a pre-sale last year but transactions did not proceed smoothly. The advisory firm was changed from Savills·Samjong KPMG to Cushman & Wakefield·Deloitte·NAI Korea, and the sale is being re-pursued. Beneforce Seongsu is a large-scale prime office under development by Beneforce at 278-3 Seongsu-dong 2-ga, Seongdong-gu, Seoul. Scheduled for completion in November, it has 6 basement floors and 18 above-ground floors with floor area of 60,661.9 square meters.
Yejeon Building in Jamsil shows similar patterns. Located at 7-26 Sincheon-dong, Songpa-gu, Seoul, this mid-sized office asset has 5 basement floors and 16 above-ground floors with floor area of 19,925 square meters (approximately 6,027 pyeong). Eden Asset Management pursued a sale last year, but acquisitions by HHR Asset Management and Koramco Asset Management did not materialize. Curiace Korea was recently selected as the new sales advisory firm, and the sale process has restarted. Bidding is scheduled for mid-month or later.
Times Square Office Buildings A and B in Yeongdeungpo, owned by Koramco Asset Trust, had no bidders during the 2024 sale attempt, and the transaction fell through. JR Investment Management recently resumed acquisition efforts by bringing in Ezs Financial Services as a strategic investor. Ezs Financial Services is a large independent corporate insurance agency that compares and provides consulting on dozens of life and non-life insurance products in one place.
Funding Capacity Becomes Critical Variable
Market analysis indicates the recent commercial real estate market faces the issue of "insufficient funds to buy" rather than "no buyers." While transactions appear possible if prices align, deal closings fail because rising loan rates simultaneously lower both available funds and investment returns. A financial investment industry official stated that rising rates change the asset prices investors can consider, and even after preferred bidder selection, transactions can be delayed if financial procurement conditions do not align, making deal closing feasibility an important variable recently.
FAQ
What caused Korean office building deals to stall in September 2026?
Senior secured loan rates for office buildings rose to 5.1-5.3% by September 3, 2026, up from 3.8% at the end of last year and 4% early this year — an increase of over 100 basis points. This rate jump created a widening gap between sellers' price expectations and buyers' financing capacity, causing multiple transactions to stall at the closing stage.
Which buildings re-entered sales processes after failed transactions?
Anam Tower in Yeoksam-dong resumed sales with Capstone Asset Management as preferred bidder after NH REITs Management's 2023 acquisition attempt failed. Suseo Rose Dale had Stick Alternative Asset Management selected as preferred bidder in August after previous attempts in 2022 and 2024. Sangam IT Tower found Korea Investment Real Estate Trust as preferred bidder after Korea Land Trust's acquisition fell through. Beneforce Seongsu and Yejeon Building changed advisory firms to restart sales processes.
