Mammoth-Scale Complex with Empty Commercial Spaces
Cooperative Holds 4th Auction for Reserved Shops
Rent Burden and Economic Downturn Combine
Urgent Need to Settle Ownership Transfer Registration
[Asia Economy Reporter Choi Dong-hyun] The commercial complex within the Helio City complex in Garak-dong, Songpa-gu, Seoul, which has nearly 10,000 households in its catchment area, has been struggling without becoming active even after nearly two years since its occupancy. As a result, bids for four reserved lots have repeatedly failed since the beginning of this year, causing the standard sale prices to drop by up to 1 billion KRW.
According to industry sources on the 26th, the Helio City association recently posted a bidding announcement for four reserved commercial lots. This is the fourth bidding since January this year. After the previous three bids all failed, the association significantly lowered the base prices. Accordingly, the standard price for the 1st-floor store No. 59 with an exclusive area of 37.44㎡ was set at 1.6 billion KRW, down 1 billion KRW from the January bid price of 2.6 billion KRW. Other properties also saw price reductions ranging from 200 million KRW to nearly 800 million KRW compared to their initial bid prices.
The Helio City commercial complex, which was occupied in December 2018, attracted attention as a mammoth-scale complex with 9,500 households and 612 stores. However, due to the impact of COVID-19 and the resulting contraction in consumer sentiment, as well as the burden of high monthly rents, a considerable number of stores remain vacant.
Among the stores still operating, many are real estate agencies. A representative from nearby A Real Estate said, "There are about 80 real estate agencies in five commercial areas within the complex," adding, "Even on the main street's first floor, except for banks, convenience stores, and hospitals, most are brokerage offices."
High monthly rents are also an obstacle to revitalizing the commercial district. For small stores on the first floor, the deposit is 100 million KRW with a monthly rent of 9 million KRW, while the 2nd and 3rd floors have rents around 3 to 4 million KRW. Although monthly rents have dropped by nearly 3 million KRW compared to the initial occupancy period, they still approach the levels of major commercial districts such as Garosugil and Teheran-ro. A representative from B Real Estate in the area explained, "If rents are lowered, sale prices also fall, so many property owners hold out without reducing prices."
Another factor deterring tenants from entering the commercial complex is the unresolved issue of ownership transfer registration. Due to internal conflicts within the association over additional contributions, the 'management disposition plan amendment' required for ownership transfer registration has not yet been approved. Recently, general buyers have even filed lawsuits against the association seeking damages for delays in ownership transfer registration.
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