RREEF acquired the building in March 2007 for W112 billion. This translates to a 62% return for RREEF from an asset it has held for less than 18 months and suggests the commercial market in South Korea continues to be vibrant.
The building is located in the Yoido Business District in Seoul. It was constructed in 1984 and has a floor space of 38,600 square metres spread over 16 levels. Daewoo Securities is the primary tenant of the building.
ôThere was very strong interest in acquiring this building, supporting our view that office demand in Seoul continues to outstrip supply with limited new space coming onto the market for the rest of the year,ö says Tae Kim, head of RREEF Korea in a written statement. Kim also commented that he expects office rentals to continue to rise, driven by demand outstripping supply.
In July RREEF embarked on its first development project in South Korea, a 16-storey office tower in Youngdungpo, on the same piece of land that currently houses the 20-storey Irae Building. RREEF acquired the fully leased Irae Building from the Korea Chamber of Commerce & Industry in November 2007 and will develop and subsequently manage the project. The end value of both towers is expected to be W200 billion.
RREEF Research said at the time that it expects SeoulÆs office market will hold prices for at least another two years despite global uncertainties, driven by the expansion of financial, professional and other services firms.
In June 2006 Deutsche Asset Management consolidated its Korean real estate business, DB Property Advisors Korea, into its existing Korean asset management business and rebranded the real estate division RREEF, in tandem with a global realignment. DB Property Advisors had operated in Korea for almost a decade sourcing and managing Korean real estate assets for domestic and offshore clients as well as offshore funds. RREEF is currently one of the most active acquirers of commercial space in the country.