Number of auctions for commercial properties in Seoul hits 7-year high

Shopping centers in Ansan, Gyeonggi-do, remain vacant. By Donghoon Sung

Last month, the number of auctions of commercial properties in Seoul reached the highest in seven years. It is interpreted that a large number of stores, whose owners have become difficult to endure vacancy due to prolonged high interest rates, have been up for sale. Of these, only one in 10 properties found a new owner.

According to data released by Ggi Auction, a data company specializing in auction, on June 2, a total of 237 auctions of commercial properties were held in Seoul last month. This is the highest number since November 2016 (244 cases). It is 2.4 times the number of auctions in the same month last year (100 cases). The number of auctions of stores in Seoul, which averaged 81 cases per month until 2022, increased to 135 cases last year and surged to 195 cases so far this year.

The auction market is stacked with properties, but the rate of the successful bid rate is plummeting due to lack of demand. Of the 237 commercial properties in Seoul which were auctioned last month, only 28 stores were sold, and the successful bid rate was only 11.8 percent. This is the lowest since July 2012 (10.4 percent). The successful bid rate for stores has remained in the 10 to 20 percent range since January last year.

Even those that do win are often sold at far lower prices than the appraised value. Last month, the average successful bid rate in the auction market for commercial properties in Seoul was 66.6 percent, down 16.7 percentage points from the previous month (83.3 percent). A store in Gasan-dong, Geumcheon-gu, was first put up for auction in November last year at an appraised value of 1.89 billion won, and after five bids, it was sold last month for 767 million won, or 40 percent of its appraised value.

“The number of stores being auctioned is increasing due to the economic downturn, but there is not much demand as the rate of return is falling due to high interest rates and the poor rental market conditions,” said Lee Joo-hyun, a senior researcher at Ggi Auction. “There is not much expectation that the rental market will revitalize in the future, so it is hard to expect the auction market of commercial properties to recover.”

※This article has undergone review by a professional translator after being translated by an AI translation tool.