Cheongdam, Yeonnam, and Ttukseom commercial districts stretching with the ‘endemic’ effect… Myeong-dong is still stagnant
Seoul’s major commercial districts, which were stagnant last year due to the impact of COVID-19, are slowly reviving. The vacancy rate of mid-to-large shopping malls, which rose to 10% last year, fell to single digits again. Although the local commercial district favored by the MZ generation is reviving, the Myeong-dong commercial district, which is highly dependent on foreign tourists, is still shrinking.
According to the results of a commercial real estate rental trend survey in the first quarter of this year published by the Korea Real Estate Agency, the vacancy rate of mid-to-large shopping malls in Seoul was 9.5%. It is understood that this index reflects the fact that the distance policy has been relaxed and the daily life recovery has expanded this year, after steadily rising from 8.9% in the first quarter of last year to 10% in the fourth quarter of last year.
By region, the vacancy rate was low in Mangwon Station (1.7%) and Donggyo/Yeonnam (0.9%), where famous food and beverage stores opened one after another. Gangnam-daero (8%), Gwanghwamun (7.9%), Yeouido (5.8%), and Teheran-ro (5.1%), which are supported by abundant jobs and stable rental demand, also maintained relatively good vacancy rates in mid-to-large shopping malls.
On the other hand, the Myeongdong commercial district, where one out of two shopping malls closed last year, is still shrinking. Although the mood in the first quarter of this year improved slightly in the Myeong-dong commercial district, the vacancy rates for medium-large and small-sized stores were 40.9% and 42.1%, respectively, which were still higher than those of other commercial districts in Seoul.
As the vacant malls are being filled one by one, the return on investment (income + return on capital) of mid-sized shopping malls in Seoul is also on the rise. The rate of return obtained when investing in mid-to-large shopping malls in Seoul was 1.8% per annum. According to the Korea Real Estate Agency, asset values rose in the Cheongdam (3.23%) and Ttukseom (2.36%) commercial districts due to increased consumption of high-end brands and increased inflow of the MZ generation.
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