As demand for retail spaces declines due to an economic recession, both the auction success rate and the successful bid ratio for retail properties have fallen in the auction market.
According to data from Gigi Auction, a real estate auction data company, the number of retail property auctions in Seoul from the 1st to the 24th, just before the Lunar New Year holiday last month, was totaled at 258. Of these, 40 were successfully auctioned, resulting in a success rate of 15.5%.
The success rate for retail properties in Seoul has fluctuated around the 10% mark, dropping to 15.9% in September of last year, followed by 15.6% in October, 12.3% in November, and 12.2% in December.
In January of this year, the successful bid ratio, which signifies the bid price compared to the appraisal price, was 68.1%, a decrease of 3.0 percentage points from the previous month. The average number of bidders stood at 1.38, remaining in the 1-person range since August of last year (1.68 people).
The situation is similar for retail properties in the metropolitan area.
In January of this year, the success rate for retail properties in Gyeonggi Province was 14.8%, down 0.2 percentage points from the previous month. The successful bid ratio fell to 48.1%, dropping to the 40% range for the first time since March 2023. The average number of bidders has remained in the 2-person range since June of last year (3.82 people).
Incheon also recorded success rates and successful bid ratios of 16.5% and 65.6%, respectively, in January.
The concurrent decline in success rates and successful bid ratios for retail properties is attributed to a sharp decrease in demand due to the recent economic downturn.
Lee Joo-hyun, a senior researcher at Gigi Auction, noted, "When examining the number of auctions, it's evident that the economy is in bad shape, leading to continuous failures in auctions even in areas with favorable locations, such as retail spaces in new city complexes, resulting in an accumulation of unsold inventory."