Apartment retail spaces that were once seen as prime investment destinations are struggling in the presale market. Even with "half-price sales" for shops in major large complexes in Seoul, there are no buyers, leading to repeated failures and a vicious cycle.
According to the construction industry on the 2nd, the Seoul Housing and Urban Development Corporation (SH) moved to sell 19 retail units in the Godeok Gangil District in Seoul and the Naegok urban lifestyle housing (Seocho Senforet) through the Onbid electronic asset disposal system from the 24th to the 27th of last month, but all failed to attract bids. These shops also failed in the tenders held in February and May.
Even though the presale prices were cut sharply from before, there was no response. The Seocho Senforet shop (Unit 104, supply area 144.7㎡) saw its expected presale price fall by more than 200 million won, from 991.12 million won to 741.52 million won. The Gangdong Lien Park Complex 13 shop (Unit B105, 42.45㎡) did not receive a winning bid even though its expected presale price fell by nearly half, from 334.75 million won to 176.13 million won.
Godeok Gangil District is a large residential area consisting of 14 complexes and 11,835 households, where large complexes such as Godeok Gracium, Godeok Arteon, and Godeok Central I'Park are clustered. It is also connected to the Gangil Misa District, giving it a solid demand base and earning it reviews as having favorable location conditions. Seocho Senforet also has a backing demand of 4,600 households.
Even so, the lack of bids stems from a decline in demand for retail investment itself. As online ordering, parcel delivery, and delivery culture became the norm, the number of self-employed seeking face-to-face operations decreased. A certified real estate agent in Gangil-dong, Gangdong District, Seoul, said, "You need tenants wanting to move into shops to have an incentive to invest in them, but aside from nail salons, cafes, hospitals, and pharmacies, which cannot be replaced by online services, there is hardly any leasing demand," adding, "The birthrate has fallen, so academies like art and taekwondo have also decreased a lot compared with before."
Retail vacancy rates are on the rise. According to the Korea Real Estate Board (REB), the nationwide vacancy rate for collective retail (apartment and officetel retail) in the third quarter (July–September) was 10.5%, up 0.4 percentage points from a year earlier. The board analyzed, "This is the continued effect of a slump in offline commercial districts due to the strength of online shopping."
The Seoul Metropolitan Government has moved to improve the system by lowering the mandatory retail ratio. It is also the first task in Mayor Oh Se-hoon's deregulation drive: "abolition and easing of nonresidential facility ratios in commercial and quasi-residential areas." In May, the city approved a promulgation of a local government ordinance and rules to lower the nonresidential facility ratio in mixed-use residential buildings in commercial zones from 20% of gross floor area to 10%.