▶ RSQUARE: Office Price Index hits 504.3, transactions reach 15.1 trillion KRW… "Recovery Cycle" in full swing since 2022 peak
▶ KIC Price Index at 192.2, down 1.5% QoQ and 6.8% YoY… Stagnating at rock bottom with no rebound momentum after 25% correction
▶ "Inverse correlation between interest rates and prices: Office recovers on demand, KIC continues to struggle"
The RSQUARE Research Center (CEO: Lee Yong-gyun), a comprehensive commercial real estate service firm, released its ‘Q3 2025 Office and Knowledge Industry Center (KIC) Price Index Report’ on the 21st. The report reveals a clear divergence in the domestic commercial real estate market, characterized by a recovery in offices and stagnation in Knowledge Industry Centers.
According to the report, the Seoul and Bundang Office Price Index rose to 504.3 points in Q3, up 1.5% from the previous quarter. This is 5.04 times higher than the baseline set in Q1 2001 (100 points), suggesting the market has moved past the price stagnation that followed the 2022 peak and entered a recovery phase.
Transaction volumes are also showing signs of normalization. Cumulative office transactions from the beginning of 2025 through Q3 reached 15.1 trillion KRW, a marked rebound from the 2023 low (9.6 trillion KRW). Following growth in 2024 (13.5 trillion KRW), this marks two consecutive years of expansion, with 2025 likely to see a return to pre-pandemic transaction levels.
In contrast, the KIC Price Index stood at 192.2 points, down 1.5% QoQ and 6.8% YoY, indicating a continued correction. After dropping approximately 25% from its peak in Q2 2022, the KIC market remains "stuck at the bottom" with no clear signals of a rebound. RSQUARE diagnosed this correction as "a process of cooling down the overheated atmosphere formed between 2020 and 2022, when low interest rates and housing regulations drove small-scale investment demand." The report explained that "the high proportion of investment demand over end-user demand led to significant price volatility."
The office market experienced an unprecedented boom in 2021 with over 20 trillion KRW in transactions amid ultra-low interest rates, but contracted sharply in 2022–2023 during the rate-hiking cycle. The Q3 report concludes that offices are leading the normalization of transactions as expectations for interest rate cuts align with leasing market stability.
The structural relationship between interest rates and sale prices was also confirmed. The report shows a relatively strong inverse correlation (-0.62) between interest rates and office sale prices over the long term. KICs, however, are an asset class more heavily influenced by investor sentiment and the regulatory environment than by interest rates alone, leading to a slower recovery following the correction.
Cap Rate (Capitalization Rate) analysis further illustrates the market positions. The office Cap Rate fell from 12.8% in 2001 to 4.0% in Q3 2025. The spread relative to interest rates stood at 138 bps, falling below the average (172–334 bps) seen since the Global Financial Crisis. This suggests limited room for further Cap Rate compression, meaning prices are more likely to show gradual growth rather than a sudden surge.
"The office market is showing clear recovery signals in both price and transactions, and this upward trend is expected to continue gradually," said Kang-min Ryu, Head of the RSQUARE Research Center. "On the other hand, KICs are trending toward bottoming out after a significant correction from their peak. It is a time for a conservative approach rather than expecting a short-term rebound." He added, "As the decoupling between offices and KICs intensifies, differentiated strategies for each asset class are essential."
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▶ RSQUARE: Office Price Index hits 504.3, transactions reach 15.1 trillion KRW… "Recovery Cycle" in full swing since 2022 peak
▶ KIC Price Index at 192.2, down 1.5% QoQ and 6.8% YoY… Stagnating at rock bottom with no rebound momentum after 25% correction
▶ "Inverse correlation between interest rates and prices: Office recovers on demand, KIC continues to struggle"
The RSQUARE Research Center (CEO: Lee Yong-gyun), a comprehensive commercial real estate service firm, released its ‘Q3 2025 Office and Knowledge Industry Center (KIC) Price Index Report’ on the 21st. The report reveals a clear divergence in the domestic commercial real estate market, characterized by a recovery in offices and stagnation in Knowledge Industry Centers.
According to the report, the Seoul and Bundang Office Price Index rose to 504.3 points in Q3, up 1.5% from the previous quarter. This is 5.04 times higher than the baseline set in Q1 2001 (100 points), suggesting the market has moved past the price stagnation that followed the 2022 peak and entered a recovery phase.
Transaction volumes are also showing signs of normalization. Cumulative office transactions from the beginning of 2025 through Q3 reached 15.1 trillion KRW, a marked rebound from the 2023 low (9.6 trillion KRW). Following growth in 2024 (13.5 trillion KRW), this marks two consecutive years of expansion, with 2025 likely to see a return to pre-pandemic transaction levels.
In contrast, the KIC Price Index stood at 192.2 points, down 1.5% QoQ and 6.8% YoY, indicating a continued correction. After dropping approximately 25% from its peak in Q2 2022, the KIC market remains "stuck at the bottom" with no clear signals of a rebound. RSQUARE diagnosed this correction as "a process of cooling down the overheated atmosphere formed between 2020 and 2022, when low interest rates and housing regulations drove small-scale investment demand." The report explained that "the high proportion of investment demand over end-user demand led to significant price volatility."
The office market experienced an unprecedented boom in 2021 with over 20 trillion KRW in transactions amid ultra-low interest rates, but contracted sharply in 2022–2023 during the rate-hiking cycle. The Q3 report concludes that offices are leading the normalization of transactions as expectations for interest rate cuts align with leasing market stability.
The structural relationship between interest rates and sale prices was also confirmed. The report shows a relatively strong inverse correlation (-0.62) between interest rates and office sale prices over the long term. KICs, however, are an asset class more heavily influenced by investor sentiment and the regulatory environment than by interest rates alone, leading to a slower recovery following the correction.
Cap Rate (Capitalization Rate) analysis further illustrates the market positions. The office Cap Rate fell from 12.8% in 2001 to 4.0% in Q3 2025. The spread relative to interest rates stood at 138 bps, falling below the average (172–334 bps) seen since the Global Financial Crisis. This suggests limited room for further Cap Rate compression, meaning prices are more likely to show gradual growth rather than a sudden surge.
"The office market is showing clear recovery signals in both price and transactions, and this upward trend is expected to continue gradually," said Kang-min Ryu, Head of the RSQUARE Research Center. "On the other hand, KICs are trending toward bottoming out after a significant correction from their peak. It is a time for a conservative approach rather than expecting a short-term rebound." He added, "As the decoupling between offices and KICs intensifies, differentiated strategies for each asset class are essential."