Korean Logistics Warehouse Investment Return Calculator

Three numbers tell you what is left after buying a logistics warehouse and leasing it out. The first is the cap rate: what the building itself earns in a year if you paid for it entirely in cash. The second is the cash-on-cash return: with a loan in place, the cash left after interest as a percentage of the money you actually put in. The third is the leverage spread, the cap rate minus the interest rate, which shows at a glance whether borrowing is amplifying your return or eating it.

The inputs are the purchase price, gross floor area, monthly rent per pyeong, vacancy rate, operating expense ratio, loan-to-value, interest rate, and acquisition cost ratio. Choosing ambient or cold storage swaps in the rent and vacancy figures measured in the capital area in H1 2026. Everything else you can enter yourself, or leave at the defaults to see the market-average scenario.

Individuals and companies looking at a logistics centre for sale. The broker's pack lists the rent and a cap rate, but not what your own money actually earns once vacancy, operating costs, acquisition tax and loan interest are all taken out. That final number is what this calculator is for.

It also helps when deciding how much to borrow. On the same building, if the cap rate is above the interest rate, more debt raises the cash-on-cash return; if it is below, more debt lowers it. Push the loan-to-value field up from zero and you can see where the return turns. If you are weighing ambient against cold storage, toggle between the two and see how much of the headline rent gap survives the vacancy rate.

This calculator follows the standard metrics of commercial property investment rather than any tax statute. The order is as follows. Floor area times monthly rent per pyeong times 12 gives the potential gross income, assuming no vacancy at all. Subtract the vacancy rate and you have the effective gross income; subtract operating expenses, which are effective gross income times the operating expense ratio, and you have net operating income, or NOI. NOI divided by the purchase price is the cap rate.

Then comes the financing. Purchase price times loan-to-value is the loan, and the rest is equity. Acquisition costs such as acquisition tax, registration and agent fees are the price times the acquisition cost ratio, and adding them to equity gives the total cash invested. The loan times the interest rate is annual interest; NOI less interest is the before-tax cash flow, and that divided by total cash invested is the cash-on-cash return. The leverage spread is the cap rate minus the interest rate.

The defaults are capital-area logistics centre figures from H1 2026. Ambient storage rents at ₩36,100 per pyeong per month with a 15% vacancy rate; cold storage at ₩61,000 with 37%. The market average cap rate is 5.2% and the senior secured lending rate is 4.74%.

Suppose you buy an ambient warehouse of 3,000 pyeong for ₩17 billion. At ₩36,100 per pyeong the potential gross income is ₩1,299.6 million a year; after 15% vacancy the effective gross income is ₩1,104.7 million. Taking out 20% operating expenses, ₩220.9 million, leaves NOI of ₩883.7 million, and dividing by ₩17 billion gives a cap rate of 5.20%, almost exactly the market average. At 60% loan-to-value the loan is ₩10.2 billion and equity ₩6.8 billion; adding 4.6% acquisition costs of ₩782 million makes ₩7,582 million of total cash invested. Annual interest of ₩483.5 million comes off NOI for a before-tax cash flow of ₩400.2 million, a cash-on-cash return of 5.28%. The spread is +0.46 points, so the loan lifts the return only slightly.

Buy the same building with no loan and the cash-on-cash return falls to 4.97%. Borrowing 60% adds barely 0.3 points, so a small rise in rates would flip it. Switch to cold storage and the ₩61,000 rent lifts potential income sharply, but after 37% vacancy the NOI is ₩1,106.8 million, the cap rate 6.51% and the cash-on-cash return 8.22%. The headline rent is 1.7 times ambient; the gap in actual return is far narrower.

The most common error is setting vacancy to zero. Advertised rents assume full occupancy, while the measured vacancy rate is 15% for ambient and 37% for cold storage. Leaving vacancy out inflates the cap rate badly. The second is forgetting acquisition costs. Acquisition tax, registration and agent fees run to a few percent of the price and all come out of equity, so dropping them shrinks the cash invested and makes the return look better than it is.

The third is treating leverage as always good. On a building with a negative spread, every extra won of debt lowers the return on your own money. In a market like the present one, where the cap rate and the lending rate sit close together, borrowing adds risk while adding almost no return. The fourth is forgetting that the figures are before tax. The cash flow here is before income or corporate tax and before holding taxes such as property tax, and it ignores principal repayments. Finally, rent growth and any gain on sale are not in the model. It is a first-year cash flow tool, and long-term returns need a separate analysis.