In its heyday, foreign direct investment in Asia was primarily focused on the Tier I cities, such as Beijing, Seoul, Tokyo and Mumbai. These cities are the population and business centers of their countries, with active and growing economies. Tier I cities are the most liquid, mature and transparent of the cities in Asia, with a variety of choices for investment properties and tenants. But with this flood of capital came falling cap rates, making investment in these primary cities a very pricey endeavor. Faced with steep pricing, intense competition and liquidity surpluses in the Tier I cities, investors began to look at some of the Tier II and III cities, where prices were lower and therefore returns higher.

Australia, one of the most resource-rich developed countries in the world, weathered with little damage the Asian financial crisis of the late 1990s as well as the slump following the terrorist attacks of 11 September 2001 and IT bubble in the earlier part of this decade. Similarly, while the severity of the current downturn is significant by Australian standards, it is expected to be less severe than that anticipated for the manufacturing-centric, export-reliant countries to Australia’s north.

Institutional funds keen to shed risk have withdrawn hastily from emerging markets, but Asia still holds choice destinations for the discerning, forward-looking investor. This article considers some perspectives on property investment in Seoul focusing in particular on the attractiveness of the city’s office market to investors while acknowledging the lingering risks and challenges, which despite the positives remain significant. Seoul possesses several unique structural supports that should lend resilience — a rare trait amid the prevailing turbulence.