Boston, MA -- (SBWIRE) -- 09/10/2013 -- The South Korea Real Estate report examines the commercial office, retail, industrial and construction segments in the context of an economy in its initial recovery stages though still vulnerable to regional and global economic trends. While the country's physical and financial infrastructure is above average, a recent lack of diversified foreign investment has limited its potential, a disparity further amplified by increased tensions with its northern neighbour.

Preparation for the 2018 Winter Olympics has played a significant role in the country's economic recovery and investment potential. With real GDP forecasted to grow at 2.5% in 2013 (notably higher than 2012 levels), a three year period of diminishing growth will end. Largely positive economic news has translated into increased consumer confidence, and the government has taken extra steps to revive its stagnating property market, most notably with April's stimulus announcement and a decision in May to further reduce interest rates.

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Despite an improved economic outlook, concerns remain for South Korea's real estate sector and its investment potential. Primarily, an export-oriented economy, the country has relied heavily on the IT technology and automobile sectors, which are notable for their historic volatility on the global market. Fears of a weakened Chinese economy and decreasing demand from Europe and the United States have taken their toll on the South Korean industrial sector. Additionally, the appreciation of the KRW relative to its regional competitors has limited the country's competitiveness, especially with regard to Japan. As such, the FDI climate in the industrial sector remains stagnant, as investors seek other markets with greater rates of return. Ever-present tensions with neighbouring North Korea remain a debilitating barrier to investment return; escalations in early 2013 precipitated capital flight, though this has stabilized somewhat as of July.

Though global-macro and geopolitical concerns have dampened the investment outlook, the year 2013 has seen some notable improvements to the South Korean real estate market. The office and retail markets in Seoul continue to be a driver of economic growth for the nation. Additionally, demand for tourist hotels and retail space in addition to business hotel facilities is currently outstripping supply. Tourism in South Korea has been increasing at an average rate of 10% per year, a promising development for the retail and hospitality sectors. Increased consumer confidence, rising incomes, and cultural shifts on saving have also benefitted the retail sector in 2013.

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