Seoul shopping mall rents inch up 0.8% in Q2

High street rents also slightly increased by 0.6%.

JLL data showed that both Shopping Malls and High Streets in Seoul observed an increase in net effective rents by 0.8% and 0.6% q-o-q, respectively. 

Looking at High Street districts, JLL said rents in Myeongdong showed the largest increase of 1.0% q-o-q, underpinned by the revitalisation in tourism, and other districts exhibited an increase of around 0.5% q-o-q.

Here’s more from JLL:

Market yields for both Shopping Malls and High Streets went up 10 bps, reaching 6.0% and 5.8%, respectively. There was one hypermarket deal in the quarter—Lotte Mart Songpa branch (Munjeong Plaza)—purchased by the local developer, Donghoon, for about KRW 285.0 billion. The seller of the property was KT AMC, financed by the National Pension Service (NPS).

Vacancy rates of both Shopping Malls and High Streets contract

No new retail assets were introduced to the JLL basket in 2Q23.

The vacancy rates of Prime Shopping Malls contracted marginally by 41 bps q-o-q. All Shopping Malls exhibited improved occupancy except Times Stream, Times Square and IFC Mall. Notably, Parnas Mall resolved its vacancy entirely. For High Streets, Garosugil’s vacancy plunged by 1,069 bps q-o-q as it welcomed tenants like Charles & Keith and MLB, while that of other High Streets remained flat.

Outlook: Few High Street deals expected; likely traded by individuals

The improved consumer sentiment as well as a rebound in tourism should add vitality to the offline retail market. In addition, the lifting of the mask-wearing mandate is expected to boost sales of the cosmetics industry. The growing influx of foreign tourists is also expected to stimulate sales, particularly in tourist-centric commercial districts such as Myeongdong.

Investors are expected to continuously face challenges in gauging compelling opportunities in retail assets. Only assets, notably those with significant potential for value-add, will likely attract investor interest. The majority of retail sales are likely to be transactions by individuals rather than financial investors.