Korean retail investment volume hits 10-year low in 2023

Most of the transactions were for redevelopment.

According to a Savills report, the 2023 transaction volume in Korea’s retail sector amounted to approximately KRW1.2 trillion, marking a 59% decrease compared to 2022, the lowest retail transaction volume in the past decade. 

With the exception of Megabox Square in Seongsu, most transactions in 2023 were for redevelopment purposes rather than continued operations, while transactions of Emart Jungdong, Myeongil, and Munhyeon were withdrawn due to delays and unpaid balances. 

“This is linked to financial market pressures caused by high interest rates, subdued consumption stemming from a low-growth environment, and reduced operating income of offline stores due to e-commerce growth,” the report said.

Here’s more from Savills:

Despite these challenges, emerging retail districts such as Seongsu and Dosan-daero are rapidly gaining traction by emphasising diversity and prioritising experiential aspects over sales. This trend is likely to expand to other commercial areas as well.As overseas e-commerce companies, especially AliExpress and Qoo10, expand their presence and local players such as Coupang and Naver dominate the online retail scene, major retailers like Shinsegae, The HYUNDAI and Emart are likely to restructure their offline operations. 

Therefore, in 2024, the offline retail market is anticipated to shift towards diverse experiential offerings to appeal to broader age demographics. This shift will revitalise investment in the sluggish retail sector, with increased funding for repurposing and redeveloping underperforming assets expected to enhance investor confidence compared to 2023.