Plummeting Commercial Lease Premiums... Lowest Since 2015 Due to Domestic Demand Slump

[Asia Economy Reporter Onyu Lim] Last year, the average key money for commercial properties nationwide was found to be the lowest since 2015. As the domestic economy continues to stagnate and online shopping malls grow, the commercial property market atmosphere has weakened, causing the value indicator, key money, to shrink.

On the 25th, the Commercial Property Information Research Institute, a research and development company specializing in income-generating real estate, analyzed statistics from the Korea Real Estate Board and found that last year, the average key money for commercial properties nationwide was 42.76 million KRW. The average key money per 1㎡ was 633,000 KRW.

The average key money is the lowest figure since statistics began being compiled in 2015. The average key money for commercial properties showed an upward trend with ▲2015 (45.74 million KRW) ▲2016 (46.61 million KRW) ▲2017 (47.77 million KRW), but has been declining since 2018 (45.35 million KRW).

Among Seoul and six metropolitan cities, Seoul recorded the highest key money at 51.3 million KRW, while Ulsan was the lowest at 21.4 million KRW. The other metropolitan cities recorded key money in the 30 million KRW range: ▲Incheon (38.93 million KRW) ▲Busan (37.6 million KRW) ▲Gwangju (37.05 million KRW) ▲Daejeon (34.97 million KRW) ▲Daegu (32.79 million KRW).

By industry, arts, sports, and leisure-related services recorded the highest key money at 53.37 million KRW. This was followed by ▲accommodation and restaurants (47.88 million KRW) ▲wholesale and retail (44.64 million KRW) ▲real estate and rental services (30.09 million KRW) ▲associations and organizations, repair and other personal services (24.8 million KRW).

Researcher Hyuntaek Cho of the Commercial Property Information Research Institute stated, "With the ongoing domestic economic downturn and the overall decline in offline store sales, the downward trend in key money is expected to continue. In particular, polarization by industry is likely to appear according to consumer trends."