Real estate was booming in Milan and Seoul. Then came coronavirus

Daily average apartment sales fell 90% in Seoul

Milan and Seoul both saw record amounts of real estate investment in 2019. But with the emergence of coronavirus, their residential markets are taking a big hit. (Credit: ANDREAS SOLARO/AFP via Getty Images; JUNG YEON-JE/AFP via Getty Images)
Milan and Seoul both saw record amounts of real estate investment in 2019. But with the emergence of coronavirus, their residential markets are taking a big hit. (Credit: ANDREAS SOLARO/AFP via Getty Images; JUNG YEON-JE/AFP via Getty Images)

The year 2019 was a great one for real estate in Milan, the economic engine of Italy.

Office leasing hit an all-time record of 481,100 square meters (5.2 million square feet), and office investment reached an all-time high of 3.6 billion euros. On the residential side, Milan stood out as the only large Italian city to see rising home prices, thanks to a wave of new luxury development.

“Why Is Milan’s Real-Estate Market So in Fashion Right Now?” the Wall Street Journal asked three weeks ago, when Italy still had only one confirmed case of COVID-19, the disease caused by the new coronavirus. But things changed quickly.

On Monday, the Italian government announced that it would be extending quarantine and travel restrictions across the entire country — and not just the most heavily hit areas in the north, including Milan and Lombardy. The World Health Organization officially declared the virus a pandemic on Wednesday.

Data shows that the rapid spread of the epidemic across Italy has already impacted the local real estate market. Home sales in the first two months of 2020 were down 7 percent year-over-year in Lombardy, and down 12 percent in Milan, according to Scenari Immobiliari, an Italian real estate research institute.

“In the month of March a very strong reduction is probable, which is already evident in visits to apartments for sale which are less than half of what they were a year ago,” Scenari founder Mario Breglia told local media.

Breglia added that demand remained high, and he expected a half-year “rebound” after the emergency. “There are no pressures on prices, and on the contrary we have observed a slight rise in rents in Milan.”

Meanwhile, the impact on commercial real estate is less clear. “Commercial real estate sector is not the stock market. It’s slower moving and the leasing fundamentals don’t swing wildly from day to day,” said a Cushman & Wakefield research report from last week — prior to Monday’s plunge, the worst in 11 years.

The Italian government has introduced a moratorium on mortgage and other debt payments during the emergency to help consumers and businesses cope. High debt loads may pose a major risk to real estate firms and other businesses in the event of a prolonged crisis.

Read more of our coverage on coronavirus


Italy has recently surpassed both South Korea and (officially) Iran to become the country with the most coronavirus cases outside of China.

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In South Korea, where the outbreak also took a turn for the worse three weeks ago after dozens of members of a fringe religious group were diagnosed with the virus, real estate brokers have seen business dry up dramatically.

The country’s apartment market saw an average of just 458 deals per day nationwide in the first nine days of March, compared to 2,272 deals per day in December, local business outlet ChosunBiz reported Wednesday, citing government statistics. That comes out to a 80 percent decline in deal volume.

The decline has been even starker in the densely populated capital of Seoul, where daily deal volume has fallen by 90 percent from 309 deals per day to just 31.

“Business is frozen as more people are postponing moving plans because of the coronavirus, or are hesitant to show their homes to strangers out of fear of contagion,” real estate broker Mr. Park, whose office is in Seoul’s central Seongdong district, told ChosunBiz.

Across the river in the high-end Gangnam district, many brokerages have closed their doors. “Even the elderly folks in the neighborhood who would come by to chat have stopped coming,” an anonymous broker in the area said. The South Korean government’s December decision to ban mortgage lending for high-end apartments hasn’t helped business either, he added.

According to data from Korean rental startup Dabang, rents for one-room apartments in university areas in Seoul fell 2 to 9 percent last month compared to the month before, with landlords that cater to foreign exchange students having trouble finding tenants during what is usually a peak moving season.

It has also been a bad time to enter the real estate business in South Korea, as the required professional training programs for new brokers have been on hold for three weeks.

On the commercial front, 2019 had been a banner year for investment sales in Seoul, with transactions hitting a record high of 16 trillion won (about $13.5 billion), according to CBRE. The outlook for 2020 remains unclear.

The coronavirus outbreak in South Korea had showed signs of coming under control in recent days, but on Wednesday local health officials reported the country’s largest single-day increase in new cases — 242 — as well the discovery of a major cluster at a call center in Seoul.

Meanwhile, real estate players in the U.S. are largely in wait-and-see mode when it comes to the coronavirus’ impact. But New York’s housing market is already showing early signs of unease — while March is typically the busiest month of the year for Manhattan property listings, listing inventory has only grown 2.2 percent through the month’s first nine days.

“Potential sellers [have been] holding back since the beginning of the month of March,” Jonathan Miller of Miller Samuel said. “I believe the virus is the likely cause — there is a hesitancy to list at the moment.”

Write to Kevin Sun at

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