
Keppel plans to make improvements to the 1980-vintage tower
Singapore’s Keppel Land has teamed with private funds managed by Keppel Capital to buy a Seoul office tower for KRW 220 billion ($170 million), sounding an upbeat note for South Korea’s commercial property market after the country saw investors pull back on building acquisitions in the second half of 2022.
Keppel Land, Keppel Asia Macro Trends Fund IV and KB Bank Discretionary Fund have agreed to acquire the 15-storey Samhwan Building in the capital’s Jongno-gu business district, the Temasek Holdings-backed developer said Monday in a release. Local media reports identified the seller as Hana Alternative Asset Management, which had purchased the property for KRW 135 billion in 2013.
The transaction is expected to close by year-end, after which Keppel Land will hold a 39.5 percent interest in the 31,403 square metre (338,019 square foot) office block, with the remaining 31.1 and 29.4 percent stakes held by KAMTF IV and KB Bank Discretionary Fund.
“Keppel Land is excited to expand into South Korea through the acquisition of Samhwan Building in partnership with the private funds under Keppel Capital,” said Keppel Land CEO Louis Lim. “This joint investment not only harnesses the group’s complementary strengths across real estate solutions and asset management but also reinforces Keppel’s asset-light business model which leverages third-party funds for growth.”
Asset Enhancement Project
Completed in 1980, the Samhwan Building is a three-minute walk from Anguk station of the Seoul subway and a 30-minute drive from the other key business districts of Gangnam and Yeouido. The freehold tower served as the headquarters of construction firm Samhwan Group until a liquidity crisis forced the sale of Samhwan to SM Group in 2018.

Keppel Land CEO Louis Lim
The vacancy rate of the building was about 24 percent as of June, according to a local media account, with tenants including Hyundai Engineering and financial evaluator Korea Asset Pricing. Keppel is looking at asset enhancement initiatives for the property, including horizontal extension to expand leasable office space and refurbishment of existing spaces.
Plans call for adding sustainability features like high-performance building facades, energy-efficient cooling and heating systems, smart lighting systems and indoor environment monitoring, said Keppel, whose agreed price values the property at a little over KRW 7 million ($5,413) per square metre of gross floor area.
“When refurbishment works are completed, Samhwan Building will be a showpiece in South Korea of Keppel Land’s Sustainable Urban Renewal capabilities, which leverages digital technologies to retrofit, future-proof and extend the lifespan of commercial buildings,” Lim said.
Back Down to Earth
After soaring to a record KRW 54 trillion ($42 billion) in 2021, investment volume in South Korea’s commercial property market fell by 19 percent year-on-year to $26.8 billion in the first nine months of 2022 and tumbled 60 percent to $5.2 billion in the third quarter alone, according to data provider MSCI.
After the collapse of Mirae’s planned $3 billion purchase of IFC Seoul from Brookfield in the third quarter, the final months of the year saw at least one big-ticket office deal as KB Asset Management sold the 33-storey Jongno Tower to a REIT controlled by SK Group for KRW 621.5 billion ($431.7 million).
Keppel Capital CEO Christina Tan voiced confidence in rising demand for quality office spaces in Seoul, with the Samhwan Building “well-poised to capture this growing demand”.
“Keppel Capital has managed close to S$3.4 billion ($2.5 billion) of assets with gross floor area of 6.2 million square feet in South Korea since 2004, and we are confident that our experienced team, active asset management on the ground and robust value creation strategies, will enable us to generate good returns for our funds’ investors,” Tan said.
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