What was the only retail district in Seoul to record a rent decline in Q4?

Rents in this district slipped 0.5%.

According to a JLL report, both Shopping Malls and High Streets in Seoul saw an increase in net effective rents by 1.2% and 0.7% q-o-q, respectively. Looking at High Street districts, rents in Myeongdong showed the largest increase of 1.8% q-o-q, while those in Gangnamdaero and Hongdae rose by 1.0% and 0.5% q-o-q, respectively. 

In 4Q23, Cheongdam was the only High Street that recorded a decrease in net effective rents by 0.5% q-o-q.

Here’s more from JLL:

Market yields for both Shopping Malls and High Streets rose 10 bps, reaching 6.2% and 6.0%, respectively. A notable transaction was the purchase of Megabox Square Seongsu by Krafton from JoongAng Multiplex Development for KRW 243.5 billion. Krafton previously acquired E-mart Seongsu branch in 2022. Also, JR Jegi Jinro Mart acquired Lotte Mart Yangju branch for KRW 37.2 billion from Lotte Shopping.

Vacancy rates of both Shopping Malls and High Streets rise

The vacancy rates of Prime Shopping Malls climbed by 10 bps q-o-q, primarily due to rising vacancies in Noon Square. For High Streets, Garosugil and Cheongdam’s vacancy rates ticked up by 438 bps and by 489 bps q-o-q, respectively, while Myeongdong exhibited the most active leasing activity among the districts, resulting in a decrease in vacancy by 791 bps q-o-q.

Outlook: Active gatherings complement slower return of Chinese tourists

While the actual return of Chinese group tourists has been slower than expected, diversified nationalities of tourists visiting Korea and increased in-person gatherings are expected to boost retail sales. With the ongoing recovery of export conditions and rising expectations that the Fed will end the hawkish cycle and turn dovish, consumer purchasing power is expected to rise to a certain extent.

Although a few notable deals have been witnessed in the quarter, there is still a lack of active participation from financial investors in the retail investment market. Several hypermarket deals have been unsuccessful in finding a buyer despite multiple rounds of bidding. Meanwhile, efforts to secure funds from large retailers through the sale of assets have been consistently observed.

Note: Seoul Retail refers to Seoul's prime retail market.