Changes in the macro-environment typically take longer to materialize in real estate markets, relative to foreign exchange or stock markets. But the coronavirus will eventually have an impact on real estate as it has on all industries from finance and manufacturing to exports. As an export-oriented economy, even when Korea overcomes the outbreak, the negative impact will continue to be felt until the rest of the world recovers. 

This report will discuss the effects of the recent crisis on the office sector, which represents 70% of the investment market, the rapidly-expanding logistics sector, and data centers, which offer huge growth potential, but will not be covering retail and hospitality, both of which are influenced by high-level policy measures such as border closings and social distancing.

ECONOMIC OUTLOOK

Economic growth in 2019 came in a respectable 2.0% despite the impact of the US-China trade dispute, trade conflicts with Japan, the implementation of a 52-hour workweek, and a minimum wage hike. Preliminary forecasts for 2020 were in a similar range, but the figures have been revised down several times since the outbreak. In addition to the hard-hit tourism, airline and retail industries, declining oil prices and trade volumes have rippled across to the oil refining, petrochemicals, automobiles and steel industries as well. As a result, as of March 22, FocusEconomics forecast rate of growth for 2020 stood at 1%.