[Report] 'Gongsil' or Only One Door Open, the Collapsing Commercial District No.1

Seoul Myeongdong-Dongdaemun Visit
Myeongdong, the No.1 Tourist Spot, Devastated... Who Are You Closes After 8 Years
Dongdaemun, the No.1 Shopping Area, Sells Cheap... Fails Auction Over 10 Times

On the 2nd, rental notices were posted in various places on the streets of Myeongdong, Seoul, creating a quiet atmosphere. Photo by Moon Honam munonam@

[Asia Economy Reporters Onyu Lim and Seungjin Lee] On the afternoon of the 1st, Myeongdong in Jung-gu, Seoul. Along the 400-meter main street stretching from Exit 6 of Myeongdong Station on Subway Line 4 to Euljiro 1(il)-ga Station on Line 2, empty stores with only "For Rent" signs were noticeable everywhere. Stores with "Temporary Closure" notices had mail piled up at their entrances and the notices had yellowed, likely due to long-term neglect.

At a similar time, the atmosphere in the underground first floor shopping area of Good Morning City Shopping Mall in Euljiro 6-ga, Jung-gu, was no different. Inside stores displaying a variety of products from cosmetics to slimming stockings, grill plates, and suitcases, only two employees were present, and not a single customer was in sight.

The prolonged COVID-19 pandemic is causing Seoul's "No.1 tourist spot" Myeongdong and "No.1 shopping district" Dongdaemun to collapse. For four months, there have been more employees than customers, leading many to give up and put their shops up for rent. Since these commercial areas mainly rely on foreign tourists, they have missed out on the government's emergency disaster relief fund benefits. A cosmetics store owner A in Myeongdong said, "The fall is so deep that it’s even more frightening." A merchant in their 30s, B, whom we met at Good Morning City Shopping Mall, said, "We remodeled the entire underground first floor last year, but with tourists gone, the number of vacant stores is increasing."

On the 2nd, rental notices were posted in various places on the streets of Myeongdong, Seoul, creating a quiet atmosphere. Photo by Mo Honam munonam@

◆ Myeongdong, 'Closed' or 'For Rent' = The situation in Myeongdong's commercial district was even worse in the alleys than on the main roads. The vacancy rate was so high that empty stores could be found every other place. There was even a five-story building entirely up for sale. A real estate agent in Myeongdong explained, "Those currently operating stores in Myeongdong are people who have no choice but to continue because their lease contracts have not expired yet," adding, "There are many who are just waiting for their lease periods to end."

Cosmetics brands such as Nature Republic and Innisfree, which used to operate three to four stores in Myeongdong, have reduced their operations to just one store. C, who runs a cosmetics store in Myeongdong, said, "From the end of last year, Chinese tourists started to increase a bit, so we thought things might ease up, but who could have predicted COVID-19?" He added, "There was no benefit from the disaster relief fund at all, and we are facing closure. The government needs to seek support measures for tourist commercial districts."

The same goes for stores operated by large corporations. E-Land's "Who.A.U" Myeongdong branch, one of the must-visit spots for Chinese tourists, closed last month after eight years. The "Lesmore" Myeongdong Central branch, a shoe store affiliated with Kumkang Shoe, also recently closed. The outlook for the second half of the year is even worse. Real estate experts advise that since it is difficult for foreign tourists to enter the country, the existing Myeongdong commercial district is unlikely to recover. Lee Sang-hyuk, head of the Commercial Real Estate Center at The K Consulting Group, said, "Unless changes such as business type shifts are made to the commercial district itself, Myeongdong will continue to struggle to survive."

The second floor of the Dongdaemun Good Morning City shopping mall is quiet with no customers. In the Dongdaemun area, stores unable to endure business difficulties are increasingly going up for auction.

◆ Stores Unable to Find Owners Even at Auctions = The Dongdaemun area, known as the "Fashion Mecca," is also shaking at its very foundation. In famous shopping malls in the area such as Good Morning City, Migliore, and Hello APM, small stores with power cut and vacancy notices are commonly seen empty. Especially, stores that could not withstand financial difficulties are being handed over to court auctions one after another, but it is difficult to find new owners.

For example, a 4㎡ store on the underground first floor of Good Morning City has been auctioned six times without a successful bid, causing the minimum bid price to drop from 51 million KRW to 16.71 million KRW. On the morning of the 2nd, a 5㎡ store on the 3rd floor of Migliore, which is being auctioned at the Seoul Central District Court, has already been auctioned 10 times without success, with the appraisal price dropping from 65 million KRW to 6.97 million KRW. Currently, this store has overdue management fees amounting to 8.7 million KRW.

On the same day, a 4㎡ store on the 7th floor of Good Morning City Shopping Mall was auctioned 12 times, an 8㎡ store on the basement second floor of Migliore 8 times, and a 6㎡ store on the basement first floor of Hello APM 9 times without success. Even if these stores are barely sold, the prices are only about one-tenth of the market value. For example, a 3.8㎡ store in Migliore sold on the 7th of last month was auctioned at only 3.683 million KRW, which is 5% of the appraisal price.

Researcher Cho Hyun-taek from the Commercial Information Research Institute said, "The situation worsened as the 'Daigou' (Chinese personal shoppers) who supported the Dongdaemun shopping malls stopped coming due to COVID-19," adding, "This is not only true for Dongdaemun but also for other small cluster shopping areas like Namdaemun, Gangbyeon and Sindorim Technomart, and Yongsan Electronics Market."

In fact, Dongdaemun showed the largest drop in the rental price index among major commercial districts in Seoul, which is considered an indicator of commercial district revitalization. According to a recent commercial real estate rental trend survey by the Korea Real Estate Board, the rental price index in Dongdaemun's commercial district fell by 2.54% in the first quarter of this year. Compared to the Seoul average decline of 0.99% during the same period, the drop in Dongdaemun was 2.6 times greater. A Korea Real Estate Board official explained, "The decrease in tourists due to COVID-19 and the rise of online shopping caused a decline in sales of wholesale and retail businesses such as clothing in the Dongdaemun commercial district."