▶ RSQUARE Research Center releases 2026 outlook for 5 major sectors: Office, Logistics, Residential, Data Center, and Officetel
▶ "Rising office vacancies, improving logistics vacancies, risky residential Jeonse structure, and infrastructure-driven data center assets"
▶ Head of Center Kang-min Ryu: "Now is the time for long-term strategies based on demand structure and location competitiveness, rather than being swayed by short-term price forecasts"
The '2025-2026 Comprehensive Real Estate Market Analysis Report' released by the RSQUARE Research Center (Head: Kang-min Ryu) on the 2nd presents divergent outlooks for each sector.
In the Seoul office market, 'slowing demand' has emerged as a bigger issue than 'supply,' leading to an expected overall rise in vacancy rates. Conversely, the logistics center market is moving past its worst oversupply phase into an era of location-based competition. Data centers are gaining attention as 'supply-deficient' assets due to power and permitting constraints, despite surging AI demand. In the residential sector, the individual-landlord-centered 'Jeonse' structure was identified as a structural risk factor that increases market instability in response to interest rate fluctuations.
Instead of short-term price forecasts, the report focuses on fundamental changes in demand, supply, and cost structures, suggesting the need for strategic repositioning for investors and the industry.
1. Office: Vacancy Rates Expected to Rise Through 2031, Centered on CBD
The report predicts that the 2026 Seoul office market will be 'restructured around demand, cost structures, and tenant migration patterns.'
According to the data, the overall office vacancy rate in Seoul could rise to around 6.5% in the medium term. In the CBD district, where large-scale new supply is concentrated, vacancy rates could temporarily hit double digits if landlords maintain current conditions without lowering effective rents. However, this is evaluated as an inevitable structural reorganization phase as the CBD is redefined as a complex business district combining history, finance, culture, and tourism. In contrast, Gangnam (GBD) is expected to maintain a relatively low vacancy rate of about 6%, and Yeouido (YBD) at 3%.
The forecast for rising vacancy rates is rooted in supply plans and changes in demand patterns. From 2025 to 2031, approximately 2.3 million pyeong of office space is scheduled for supply in Seoul. This is a level similar to the supply cycle of 2009–2014. Notably, more than 900,000 pyeong of this supply is concentrated in the CBD alone.
"Most of the planned supply will hit the market as scheduled," stated Kang-min Ryu, Head of the Research Center. "Due to the economic slowdown, the growth in office employment is not what it used to be. The situation is one where the creation of new demand is limited."
A peculiar phenomenon was observed in the Seoul office market this year. Vacancies increased even though there was not much new supply in the core business districts and the Bundang area. In the past, large-scale new supply typically led to a rise in vacancy rates with a time lag of about two years. Recently, however, the decrease in leasing demand is driving the increase in vacancies more than supply factors are.
Tenant migration patterns have also changed. Between 2015 and 2023, numerous ventures and startups entered the CBD, Gangnam, and Yeouido through coworking spaces, and vacancies in top-tier buildings were rapidly absorbed due to the 'Flight-to-Quality' trend. However, since 2024, 'Downgrading' cases—where tenants move from the CBD, Gangnam, and Yeouido to other areas of Seoul or the outskirts of the metropolitan area due to cost-cutting pressures—have been on the rise.
The centrality of each district is also undergoing a reorganization. Gangnam has seen the steepest reinforcement of its centrality since the 2000s, while Seongsu and Magok have emerged rapidly since 2018. In contrast, the CBD’s centrality has weakened as it has a high proportion of aged buildings and its commuting population has shifted toward Gangnam and Seocho. The report evaluated that "while the large volume of new supply in the CBD will raise vacancy rates in the short term, it can serve as an opportunity to revitalize the CBD's somewhat weakened centrality and appeal." It added, "This is a transition period for the CBD to leap forward again as an international hub where business, culture, and finance converge in the long term."
2. Logistics Centers: Entering Adjustment Phase After Oversupply, Vacancy Rates to Recover to 10% Range by 2027
The logistics center market is moving past its previous oversupply phase and is being restructured into a market where site selection, automation, and transport cost reduction are the key drivers.
The Research Center forecasts that the logistics market in 2026 will see vacancy rates improve at a gradual pace. Analysis suggests that if the market continues to absorb around 1.2 million pyeong of logistics space annually, approximately 800,000 pyeong of existing vacancy can be cleared each year, even after accounting for the annual new supply of about 400,000 pyeong from 2025 to 2027. Under this scenario, room-temperature logistics vacancy rates will drop to approximately 12% in 2026 and 9% in 2027. Cold-storage vacancy rates are also projected to improve to around 27% by 2027.
The basis for this vacancy improvement lies in the sharp decline of new supply. For the Greater Seoul area, the expected average annual new supply from 2025 to 2027 is approximately 370,000 pyeong. This is only one-third of the new supply in 2024 (1.2 million pyeong). This stands in stark contrast to the past five years, where logistics inventory grew by an annual average of 15%.
In terms of location, the preference for areas with low transport costs is expected to persist. After analyzing transport costs (distance × cargo volume) across 4,900 towns and villages nationwide, the center identified Southern Gyeonggi areas—such as Seongnam, Yongin, Hwaseong, and Gwangju—as the optimal locations for "Regional Logistics" targeting nationwide demand. For "Import/Export Logistics," areas adjacent to ports and airports like Incheon, Busan, and Gimhae showed the lowest costs, while metropolitan cities with high population density were most efficient for "Local Logistics."
As of Q3 2025, vacancy rates remain high at approximately 15.7% for room-temperature and 39.2% for cold-storage (refrigerated/frozen) centers. However, despite 1.2 million pyeong of new supply in 2024 alone, national vacancy rates showed no significant change. This implies that the market absorbed nearly 1.2 million pyeong of new space annually. Driven by slowing supply growth and expanding e-commerce volumes, vacancy rates for both room-temperature and cold-storage facilities are trending slightly downward compared to the previous year.
Advancements in automation are shifting the cost structure of logistics centers. As processing efficiency doubles through automation, transport costs are becoming more critical than rent. Cold-storage logistics, in particular, handle goods that require frequent, repeated delivery—such as lunch boxes, meal kits, and fresh food—making the reduction of transport costs even more vital. In fact, a higher proportion of cold-storage facilities are located in areas with lower transport costs, such as Yongin, Hwaseong, Gwangju, and Seongnam.
On the investment market side, logistics center Cap Rates rose sharply around 2022, leading to a value adjustment. However, with the onset of interest rate cuts in 2025, the upward trend of Cap Rates has slowed, and investment transactions showed signs of recovery in the third quarter.
3. Residential: Continued Instability in Lease Markets; 'Jeonse Structure and Policy Variables are Key'
The Research Center predicted that "without positive factors like falling interest rates or expanded supply, residential sales prices next year will see limited fluctuations amid instability, while Jeonse and monthly rents will face upward pressure." Notably, the report expects that 'activating corporate rental businesses will remain difficult for the time being as improvements to the registered rental business system are delayed.' Kang-min Ryu, Head of the Research Center, stated, "Structural improvements to the Jeonse system and the diversification of rental housing providers are the key tasks for future housing market stability."
The basis for this outlook lies in the unique structure of the domestic housing market. In South Korea, individual landlords own approximately 85% of rental housing. This is a significantly higher proportion than in other major countries such as the U.S. (40% range), Japan, or Germany (60% range). When individuals supply rentals, rent prices and contract terms can vary greatly depending on taxes, interest rates, and personal circumstances, causing high instability for tenants.
Korea's unique deposit (Jeonse) system also acts as a market variable. Overseas, security deposits typically amount to one to three months' rent and serve as collateral against unpaid rent. In contrast, Korean Jeonse functions as a large-scale, long-term rent payment in lieu of monthly rent. The size of a Jeonse deposit in Korea often exceeds 40 times the monthly rent. Landlords utilize these deposits as investment capital, often combining the tenant's deposit with their own capital and loans to purchase additional properties (known as 'Gap Investment').
Typically, the movement of Jeonse and sales prices varies depending on interest rate levels. During periods of low interest rates, landlords prefer monthly rent while tenants prefer Jeonse, causing Jeonse prices to surge. Conversely, during periods of high interest rates, landlords prefer deposits while tenants prefer monthly rent, leading to stabilized or falling Jeonse prices
Globally, when comparing the number of housing units per 1,000 people, South Korea ranks 38th out of 43 surveyed countries, with fewer houses per person than Japan (17th) or the U.S. (27th). In particular, Seoul's housing supply rate remains below 100%, leading to fierce competition in the lease market.
Following the government's real estate measures announced in October 2025 (the 10.15 Measures), some rental listings have decreased, putting upward pressure on Jeonse and monthly rent prices once again, particularly in the Greater Seoul area.
The Research Center analyzed that "a decrease in rental listings due to changes in rental business regulations is expected to lead to rising rents and instability in sales prices."
Side effects such as a decrease in rental listings, an accelerated transition from Jeonse to monthly rent, and increased housing insecurity for low-income and non-homeowning classes may occur as rental business regulations, land transaction permit systems, and tightened regulations on private rental housing work to reduce the supply of rental properties.
4. Data Centers: Short-term Supply Surge, but Long-term Supply Constraints
Data centers face clear demand growth due to the expansion of AI and cloud services. However, in the short term, there is a possibility that the rate of supply increase will exceed demand. Furthermore, the sector is structured such that supply is constrained by power availability, permitting, and environmental regulations.
In its report, RSQUARE predicted a "stable growth trend mid-to-long term due to supply constraints, despite a potential temporary oversupply as projects currently under development hit the market." The global market is expected to grow approximately 1.8 times by 2029 compared to 2023. As demand for high-performance computing—such as GPUs and NPUs—increases, the importance of power, cooling, security, and network infrastructure grows proportionally.
The industry is actively discussing 'Edge Data Centers' and 'AI Data Centers.' Alongside centralized hyperscale centers, demand is emerging for small-scale edge centers for real-time processing in the 5G era and high-performance centers specialized for AI operations.
The basis for this outlook lies in the certainty of demand versus the time lag in supply. Long-term growth is guaranteed as all digital services—including AI, cloud, streaming, gaming, and fintech—require data centers. However, over the next five years, as projects currently under development are completed, a temporary surplus may occur as supply outpaces the speed of demand growth.
In the mid-to-long term, however, various supply constraint factors are expected to return the market to a stable state. Since the 2018 amendment to the Enforcement Decree of the Building Act, data centers can only be built for 'broadcasting and communication facility' purposes. Since 2023, permits for large-scale data centers in the Greater Seoul area have decreased significantly due to tightened regulations regarding power system impact assessments and distributed energy. Power supply, in particular, is the greatest constraint on data center development. National power reserve margins are gradually declining, with some areas in the metropolitan region seeing margins below 5%. Since large data centers use tens to hundreds of MW of power at once, securing grid capacity and receiving power reception approval determines the feasibility of a project.
Opposition from residents in areas where data centers are to be located also acts as a constraint. Some residents protest due to concerns over electromagnetic waves, noise, heat island effects, and environmental damage. The Research Center advised, "There are cases where development was suspended or delayed even after obtaining permits," adding that "eco-friendly development methods—such as reducing cooling equipment noise and utilizing waste heat for local district heating—are necessary for a stable supply."
The number of permits for domestic data center development showed an upward trend after 2019 but shifted to a decline starting in 2023. This is due to the government tightening regulations, such as using 'Power Reception Forecast Notifications' to review power supply adequacy and enacting the Special Act on Promotion of Distributed Energy. As of September 2025, the number of permits has dropped to half the level of the previous year (around 10 cases per month).
In terms of the investment market, major domestic asset managers are actively pursuing data center development. Since the early 2020s, there has been an increase in cases where asset managers purchase data centers or invest in development sites. Various entities—including telecommunications companies, IT firms, and specialized operators—are participating in the market. Transactions involving not only completed data centers but also development sites and business rights remain active.
5. Officetels: Limited Reflex Benefits in Sales, Rents Expected to Rise for Large Units
The Research Center predicted that while the 2026 officetel market will vary based on the intensity of apartment regulations, the "sales" and "lease" markets will show divergent trends. In the past, whenever apartment regulations were tightened, actual demand shifted to officetels, driving up sales prices. However, under the government's real estate measures announced in October 2025 (the 10.15 Measures), officetels are now subject to a one-year resale restriction and tax surcharges for multi-homeowners, which is expected to limit the reflex benefits in the sales market. In contrast, the lease market is likely to see upward pressure, particularly for medium-to-large units.
The basis for this outlook lies in the unique demand structure of the officetel market. Officetels are largely divided into two categories. Small units (40㎡ or less) form a monthly rent market centered on single-person households, with high preference among young adults (average age 35) and women. Medium-to-large units (over 85㎡) represent a market where actual demand shifted following the tightening of apartment regulations since 2017.
As apartment-centric regulations intensified starting in 2017, demand from households with two or more members moved to medium-to-large officetels. In fact, while smaller areas saw higher price growth rates before 2017, medium-to-large areas have seen higher increases since then. The prices of medium-to-large officetels exceeding 85㎡ in exclusive area show a pattern very similar to the rise in apartment prices. While the 10.15 Measures limit the sales market's reflex benefits, the demand for apartment leases may still shift to officetels, potentially driving up lease prices for medium-to-large officetels.
"Officetels are a housing type centered on small units for single-person households, with a high proportion of monthly rents," explained Kang-min Ryu, Head of the Research Center. "According to the 2023 Housing Status Survey, residential satisfaction for officetels is higher than for detached, multi-family, or row houses, and is at a similar level to apartments." He added, "Single-person households favor the small space of about 8 pyeong, and preference among women is high due to good facilities, parking, and security. However, they face issues of frequent moves and vacancies due to high monthly rents. Because the rent per pyeong is higher than other housing types, the average residency period is only 1.5 years. This short residency due to rent burdens also makes the market sensitive to rent increases."
Regarding price trends, the annual growth rate for monthly rent is low at 0.7% due to high rent burdens, but Jeonse (deposit-based lease) shows a high growth rate of 3.7%. The lower growth rate of sales prices compared to other housing types is attributed to the limits on monthly rent increases affecting sales value. Transaction data shows that monthly rent transactions outnumber Jeonse, with a high proportion of small-unit transactions. For units 40㎡ or less, monthly rents account for the 90% range and Jeonse for the 80% range. Annual sales transactions are under 20,000 cases; transactions increased from 2017 to 2021 but have since declined.
6. Closing the 2025 Analysis and Outlook for Next Year
Starting from 2025, the domestic real estate market has been showing a segmented flow.
In the Office and Logistics sectors, a "rebalancing of supply and demand" is taking place following a period of overheating, with vacancy rates and prices entering an adjustment phase. The Residential market continues to seek stability amidst chronic lease structure issues and policy variables. Data Centers possess significant mid-to-long-term growth potential based on the growth of the digital economy; however, there is a possibility of a short-term supply increase, and long-term growth is contingent upon resolving infrastructure and regulatory challenges. The Officetel market is structured to be linked with apartment regulations; following the October 15 (10.15) Measures, reflex benefits in the sales market will be limited, though the lease market is expected to face upward pressure, particularly for large-scale units.
"While the overall stability and profitability of the real estate market have decreased compared to the past, this is part of a healthy market maturation process," stated Kang-min Ryu, Head of the Research Center. He added, "This is a time that requires substantial operation and a long-term perspective, rather than expecting rapid asset value spikes through excessive leverage." He further advised, "The government should also strive to improve supply structures and supplement institutional frameworks while minimizing market distortions."
\ 
▶ RSQUARE Research Center releases 2026 outlook for 5 major sectors: Office, Logistics, Residential, Data Center, and Officetel
▶ "Rising office vacancies, improving logistics vacancies, risky residential Jeonse structure, and infrastructure-driven data center assets"
▶ Head of Center Kang-min Ryu: "Now is the time for long-term strategies based on demand structure and location competitiveness, rather than being swayed by short-term price forecasts"
The '2025-2026 Comprehensive Real Estate Market Analysis Report' released by the RSQUARE Research Center (Head: Kang-min Ryu) on the 2nd presents divergent outlooks for each sector.
In the Seoul office market, 'slowing demand' has emerged as a bigger issue than 'supply,' leading to an expected overall rise in vacancy rates. Conversely, the logistics center market is moving past its worst oversupply phase into an era of location-based competition. Data centers are gaining attention as 'supply-deficient' assets due to power and permitting constraints, despite surging AI demand. In the residential sector, the individual-landlord-centered 'Jeonse' structure was identified as a structural risk factor that increases market instability in response to interest rate fluctuations.
Instead of short-term price forecasts, the report focuses on fundamental changes in demand, supply, and cost structures, suggesting the need for strategic repositioning for investors and the industry.
1. Office: Vacancy Rates Expected to Rise Through 2031, Centered on CBD
The report predicts that the 2026 Seoul office market will be 'restructured around demand, cost structures, and tenant migration patterns.'
According to the data, the overall office vacancy rate in Seoul could rise to around 6.5% in the medium term. In the CBD district, where large-scale new supply is concentrated, vacancy rates could temporarily hit double digits if landlords maintain current conditions without lowering effective rents. However, this is evaluated as an inevitable structural reorganization phase as the CBD is redefined as a complex business district combining history, finance, culture, and tourism. In contrast, Gangnam (GBD) is expected to maintain a relatively low vacancy rate of about 6%, and Yeouido (YBD) at 3%.
The forecast for rising vacancy rates is rooted in supply plans and changes in demand patterns. From 2025 to 2031, approximately 2.3 million pyeong of office space is scheduled for supply in Seoul. This is a level similar to the supply cycle of 2009–2014. Notably, more than 900,000 pyeong of this supply is concentrated in the CBD alone.
"Most of the planned supply will hit the market as scheduled," stated Kang-min Ryu, Head of the Research Center. "Due to the economic slowdown, the growth in office employment is not what it used to be. The situation is one where the creation of new demand is limited."
A peculiar phenomenon was observed in the Seoul office market this year. Vacancies increased even though there was not much new supply in the core business districts and the Bundang area. In the past, large-scale new supply typically led to a rise in vacancy rates with a time lag of about two years. Recently, however, the decrease in leasing demand is driving the increase in vacancies more than supply factors are.
Tenant migration patterns have also changed. Between 2015 and 2023, numerous ventures and startups entered the CBD, Gangnam, and Yeouido through coworking spaces, and vacancies in top-tier buildings were rapidly absorbed due to the 'Flight-to-Quality' trend. However, since 2024, 'Downgrading' cases—where tenants move from the CBD, Gangnam, and Yeouido to other areas of Seoul or the outskirts of the metropolitan area due to cost-cutting pressures—have been on the rise.
The centrality of each district is also undergoing a reorganization. Gangnam has seen the steepest reinforcement of its centrality since the 2000s, while Seongsu and Magok have emerged rapidly since 2018. In contrast, the CBD’s centrality has weakened as it has a high proportion of aged buildings and its commuting population has shifted toward Gangnam and Seocho. The report evaluated that "while the large volume of new supply in the CBD will raise vacancy rates in the short term, it can serve as an opportunity to revitalize the CBD's somewhat weakened centrality and appeal." It added, "This is a transition period for the CBD to leap forward again as an international hub where business, culture, and finance converge in the long term."
2. Logistics Centers: Entering Adjustment Phase After Oversupply, Vacancy Rates to Recover to 10% Range by 2027
The logistics center market is moving past its previous oversupply phase and is being restructured into a market where site selection, automation, and transport cost reduction are the key drivers.
The Research Center forecasts that the logistics market in 2026 will see vacancy rates improve at a gradual pace. Analysis suggests that if the market continues to absorb around 1.2 million pyeong of logistics space annually, approximately 800,000 pyeong of existing vacancy can be cleared each year, even after accounting for the annual new supply of about 400,000 pyeong from 2025 to 2027. Under this scenario, room-temperature logistics vacancy rates will drop to approximately 12% in 2026 and 9% in 2027. Cold-storage vacancy rates are also projected to improve to around 27% by 2027.
The basis for this vacancy improvement lies in the sharp decline of new supply. For the Greater Seoul area, the expected average annual new supply from 2025 to 2027 is approximately 370,000 pyeong. This is only one-third of the new supply in 2024 (1.2 million pyeong). This stands in stark contrast to the past five years, where logistics inventory grew by an annual average of 15%.
In terms of location, the preference for areas with low transport costs is expected to persist. After analyzing transport costs (distance × cargo volume) across 4,900 towns and villages nationwide, the center identified Southern Gyeonggi areas—such as Seongnam, Yongin, Hwaseong, and Gwangju—as the optimal locations for "Regional Logistics" targeting nationwide demand. For "Import/Export Logistics," areas adjacent to ports and airports like Incheon, Busan, and Gimhae showed the lowest costs, while metropolitan cities with high population density were most efficient for "Local Logistics."
As of Q3 2025, vacancy rates remain high at approximately 15.7% for room-temperature and 39.2% for cold-storage (refrigerated/frozen) centers. However, despite 1.2 million pyeong of new supply in 2024 alone, national vacancy rates showed no significant change. This implies that the market absorbed nearly 1.2 million pyeong of new space annually. Driven by slowing supply growth and expanding e-commerce volumes, vacancy rates for both room-temperature and cold-storage facilities are trending slightly downward compared to the previous year.
Advancements in automation are shifting the cost structure of logistics centers. As processing efficiency doubles through automation, transport costs are becoming more critical than rent. Cold-storage logistics, in particular, handle goods that require frequent, repeated delivery—such as lunch boxes, meal kits, and fresh food—making the reduction of transport costs even more vital. In fact, a higher proportion of cold-storage facilities are located in areas with lower transport costs, such as Yongin, Hwaseong, Gwangju, and Seongnam.
On the investment market side, logistics center Cap Rates rose sharply around 2022, leading to a value adjustment. However, with the onset of interest rate cuts in 2025, the upward trend of Cap Rates has slowed, and investment transactions showed signs of recovery in the third quarter.
3. Residential: Continued Instability in Lease Markets; 'Jeonse Structure and Policy Variables are Key'
The Research Center predicted that "without positive factors like falling interest rates or expanded supply, residential sales prices next year will see limited fluctuations amid instability, while Jeonse and monthly rents will face upward pressure." Notably, the report expects that 'activating corporate rental businesses will remain difficult for the time being as improvements to the registered rental business system are delayed.' Kang-min Ryu, Head of the Research Center, stated, "Structural improvements to the Jeonse system and the diversification of rental housing providers are the key tasks for future housing market stability."
The basis for this outlook lies in the unique structure of the domestic housing market. In South Korea, individual landlords own approximately 85% of rental housing. This is a significantly higher proportion than in other major countries such as the U.S. (40% range), Japan, or Germany (60% range). When individuals supply rentals, rent prices and contract terms can vary greatly depending on taxes, interest rates, and personal circumstances, causing high instability for tenants.
Korea's unique deposit (Jeonse) system also acts as a market variable. Overseas, security deposits typically amount to one to three months' rent and serve as collateral against unpaid rent. In contrast, Korean Jeonse functions as a large-scale, long-term rent payment in lieu of monthly rent. The size of a Jeonse deposit in Korea often exceeds 40 times the monthly rent. Landlords utilize these deposits as investment capital, often combining the tenant's deposit with their own capital and loans to purchase additional properties (known as 'Gap Investment').
Typically, the movement of Jeonse and sales prices varies depending on interest rate levels. During periods of low interest rates, landlords prefer monthly rent while tenants prefer Jeonse, causing Jeonse prices to surge. Conversely, during periods of high interest rates, landlords prefer deposits while tenants prefer monthly rent, leading to stabilized or falling Jeonse prices
Globally, when comparing the number of housing units per 1,000 people, South Korea ranks 38th out of 43 surveyed countries, with fewer houses per person than Japan (17th) or the U.S. (27th). In particular, Seoul's housing supply rate remains below 100%, leading to fierce competition in the lease market.
Following the government's real estate measures announced in October 2025 (the 10.15 Measures), some rental listings have decreased, putting upward pressure on Jeonse and monthly rent prices once again, particularly in the Greater Seoul area.
The Research Center analyzed that "a decrease in rental listings due to changes in rental business regulations is expected to lead to rising rents and instability in sales prices."
Side effects such as a decrease in rental listings, an accelerated transition from Jeonse to monthly rent, and increased housing insecurity for low-income and non-homeowning classes may occur as rental business regulations, land transaction permit systems, and tightened regulations on private rental housing work to reduce the supply of rental properties.
4. Data Centers: Short-term Supply Surge, but Long-term Supply Constraints
Data centers face clear demand growth due to the expansion of AI and cloud services. However, in the short term, there is a possibility that the rate of supply increase will exceed demand. Furthermore, the sector is structured such that supply is constrained by power availability, permitting, and environmental regulations.
In its report, RSQUARE predicted a "stable growth trend mid-to-long term due to supply constraints, despite a potential temporary oversupply as projects currently under development hit the market." The global market is expected to grow approximately 1.8 times by 2029 compared to 2023. As demand for high-performance computing—such as GPUs and NPUs—increases, the importance of power, cooling, security, and network infrastructure grows proportionally.
The industry is actively discussing 'Edge Data Centers' and 'AI Data Centers.' Alongside centralized hyperscale centers, demand is emerging for small-scale edge centers for real-time processing in the 5G era and high-performance centers specialized for AI operations.
The basis for this outlook lies in the certainty of demand versus the time lag in supply. Long-term growth is guaranteed as all digital services—including AI, cloud, streaming, gaming, and fintech—require data centers. However, over the next five years, as projects currently under development are completed, a temporary surplus may occur as supply outpaces the speed of demand growth.
In the mid-to-long term, however, various supply constraint factors are expected to return the market to a stable state. Since the 2018 amendment to the Enforcement Decree of the Building Act, data centers can only be built for 'broadcasting and communication facility' purposes. Since 2023, permits for large-scale data centers in the Greater Seoul area have decreased significantly due to tightened regulations regarding power system impact assessments and distributed energy. Power supply, in particular, is the greatest constraint on data center development. National power reserve margins are gradually declining, with some areas in the metropolitan region seeing margins below 5%. Since large data centers use tens to hundreds of MW of power at once, securing grid capacity and receiving power reception approval determines the feasibility of a project.
Opposition from residents in areas where data centers are to be located also acts as a constraint. Some residents protest due to concerns over electromagnetic waves, noise, heat island effects, and environmental damage. The Research Center advised, "There are cases where development was suspended or delayed even after obtaining permits," adding that "eco-friendly development methods—such as reducing cooling equipment noise and utilizing waste heat for local district heating—are necessary for a stable supply."
The number of permits for domestic data center development showed an upward trend after 2019 but shifted to a decline starting in 2023. This is due to the government tightening regulations, such as using 'Power Reception Forecast Notifications' to review power supply adequacy and enacting the Special Act on Promotion of Distributed Energy. As of September 2025, the number of permits has dropped to half the level of the previous year (around 10 cases per month).
In terms of the investment market, major domestic asset managers are actively pursuing data center development. Since the early 2020s, there has been an increase in cases where asset managers purchase data centers or invest in development sites. Various entities—including telecommunications companies, IT firms, and specialized operators—are participating in the market. Transactions involving not only completed data centers but also development sites and business rights remain active.
5. Officetels: Limited Reflex Benefits in Sales, Rents Expected to Rise for Large Units
The Research Center predicted that while the 2026 officetel market will vary based on the intensity of apartment regulations, the "sales" and "lease" markets will show divergent trends. In the past, whenever apartment regulations were tightened, actual demand shifted to officetels, driving up sales prices. However, under the government's real estate measures announced in October 2025 (the 10.15 Measures), officetels are now subject to a one-year resale restriction and tax surcharges for multi-homeowners, which is expected to limit the reflex benefits in the sales market. In contrast, the lease market is likely to see upward pressure, particularly for medium-to-large units.
The basis for this outlook lies in the unique demand structure of the officetel market. Officetels are largely divided into two categories. Small units (40㎡ or less) form a monthly rent market centered on single-person households, with high preference among young adults (average age 35) and women. Medium-to-large units (over 85㎡) represent a market where actual demand shifted following the tightening of apartment regulations since 2017.
As apartment-centric regulations intensified starting in 2017, demand from households with two or more members moved to medium-to-large officetels. In fact, while smaller areas saw higher price growth rates before 2017, medium-to-large areas have seen higher increases since then. The prices of medium-to-large officetels exceeding 85㎡ in exclusive area show a pattern very similar to the rise in apartment prices. While the 10.15 Measures limit the sales market's reflex benefits, the demand for apartment leases may still shift to officetels, potentially driving up lease prices for medium-to-large officetels.
"Officetels are a housing type centered on small units for single-person households, with a high proportion of monthly rents," explained Kang-min Ryu, Head of the Research Center. "According to the 2023 Housing Status Survey, residential satisfaction for officetels is higher than for detached, multi-family, or row houses, and is at a similar level to apartments." He added, "Single-person households favor the small space of about 8 pyeong, and preference among women is high due to good facilities, parking, and security. However, they face issues of frequent moves and vacancies due to high monthly rents. Because the rent per pyeong is higher than other housing types, the average residency period is only 1.5 years. This short residency due to rent burdens also makes the market sensitive to rent increases."
Regarding price trends, the annual growth rate for monthly rent is low at 0.7% due to high rent burdens, but Jeonse (deposit-based lease) shows a high growth rate of 3.7%. The lower growth rate of sales prices compared to other housing types is attributed to the limits on monthly rent increases affecting sales value. Transaction data shows that monthly rent transactions outnumber Jeonse, with a high proportion of small-unit transactions. For units 40㎡ or less, monthly rents account for the 90% range and Jeonse for the 80% range. Annual sales transactions are under 20,000 cases; transactions increased from 2017 to 2021 but have since declined.
6. Closing the 2025 Analysis and Outlook for Next Year
Starting from 2025, the domestic real estate market has been showing a segmented flow.
In the Office and Logistics sectors, a "rebalancing of supply and demand" is taking place following a period of overheating, with vacancy rates and prices entering an adjustment phase. The Residential market continues to seek stability amidst chronic lease structure issues and policy variables. Data Centers possess significant mid-to-long-term growth potential based on the growth of the digital economy; however, there is a possibility of a short-term supply increase, and long-term growth is contingent upon resolving infrastructure and regulatory challenges. The Officetel market is structured to be linked with apartment regulations; following the October 15 (10.15) Measures, reflex benefits in the sales market will be limited, though the lease market is expected to face upward pressure, particularly for large-scale units.
"While the overall stability and profitability of the real estate market have decreased compared to the past, this is part of a healthy market maturation process," stated Kang-min Ryu, Head of the Research Center. He added, "This is a time that requires substantial operation and a long-term perspective, rather than expecting rapid asset value spikes through excessive leverage." He further advised, "The government should also strive to improve supply structures and supplement institutional frameworks while minimizing market distortions."