Commercial buildings in Pangyo under limelight on lifting of 10-year resale ban

Pangyo Techno Valley known as the Silicon Valley of Korea is poised to be South Korea’s next commercial real estate hot spot as many of major commercial buildings in the area will be eligible to be resold on the lifting of a 10-year resale restriction in phases starting this month.

The prices of landmark office buildings located in the industrial complex in the city of Pangyo, Seongnam, Gyeonggi Province, surged 10-fold from 2011 when the price started at some 10 million won ($8,400) per 3.3 square meter.

According to sources on Monday, Ahnlab, Hancom, and Dasan Networks among others are free to resell or transfer their building ownership to other companies as their last year of ownership registration exceeds 10 years this month. More than 90 buildings in Pangyo Techno Valley are subject to the resale restriction, but 17 of them will get free from the ban by the end of this year, eight next year and another 12 in 2023.

Real estate funds, REITs and trust businesses are now active in the market to get first crack at potential deals.

There are many investors who have an eye on deals in Pangyo as the resale ban is lifted for some lucrative buildings after 10 years, said a real estate asset manager. Korea Real Estate Investment & Trust purchased H Square in Pangyo Techno Valley for 700 billion won in July and agreed to buy Dasan Tower there from Dasan Networks this month.

The local real estate industry expects Pangyo’s property value to increase further on rising demand for good office space. Office rents in the district have risen as high as those in downtown Seoul, and the vacancy rate is virtually zero percent. The value of commercial buildings will further increase in the future when the city’s building height restriction is relaxed, market experts forecast.

The price of Pangyo commercial buildings is rising faster than that in downtown Seoul or Gangnam because of its proximity to the Shinbundang Line that connects key business destinations in the capital, said Lim Dong-soo, managing director of CBRE Korea, adding that since it can be classified as a greater Gangnam area in the market, its value is expected to jump higher in the future.

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