Seongdong-gu, Leading Seoul District with 7.0% Growth in Local Gross Regional Domestic Product (GRDP): What Is the Reason?

Seongdong-gu Achieves Highest Growth Among Districts with 7.0% Increase in 2018 GRDP...Significant Growth in Real Estate (26.3%) and Information & Communication (21.7%)...Efforts Include Relaxed Floor Area Ratio, Acquisition and Property Tax Reductions, Active Attraction of Knowledge Industry Centers...Streamlined Building Approval Procedures and Regulatory Reforms like Wangsimni Station Area District Unit Plan Changes Foster Business-Friendly Environment

Seongdong-gu Panorama

Growth Rate by District Compared to the Previous Year in 2018 (Chain Price Based on 2015)
(Unit: %)

[Asia Economy Reporter Jongil Park] Seongdong-gu (Mayor Jung Won-oh) recorded a 7.0% growth rate in Gross Regional Domestic Product (GRDP) in 2018 compared to the previous year, achieving the highest growth among the 25 autonomous districts of Seoul.

On the 15th, Seoul City announced the "Seoul Gross Regional Domestic Product (GRDP) Report," which evaluates all goods and services produced in Seoul in 2018 at market value.

GRDP is an economic indicator that comprehensively captures the regional economy of each district and is used for establishing and evaluating various economic policies.

According to the report, the GRDP scale of Seongdong-gu in 2018 was 11.657 trillion KRW, showing a 7.0% growth rate compared to the previous year. This is the highest growth rate among Seoul’s districts.

The per capita GRDP of Seongdong-gu, based on an estimated population of 306,092, is 38.08 million KRW.

Compared to the overall Seoul growth rate (3.6%) and the second and third highest growth rates in Songpa-gu (5.8%) and Gangdong-gu (5.6%), Seongdong-gu recorded a higher growth rate of 7.0%.

In particular, the real estate and information and communication sectors grew significantly by 26.3% and 21.7%, respectively, compared to the previous year.

Seongdong-gu explained that the secret to this economic growth lies in the district’s proactive policies aimed at creating a business-friendly environment.

First, efforts to attract knowledge industry centers centered around the Seongsu-dong area. The number of knowledge industry center units sold and companies moving in within Seongdong-gu has greatly increased over the past four years since 2015.

The number of units increased approximately 3.4 times from 363 units in 2015 to 1,234 units in 2018, and local taxes from new center constructions also nearly tripled from 6.22 billion KRW in 2015 to 18.537 billion KRW in 2018.

This is the result of Seongdong-gu’s active policy support to attract knowledge industry centers, including floor area ratio relaxation, a 50% reduction in acquisition tax, and a 37.5% reduction in property tax.

Currently, Seongdong-gu houses 62 knowledge industry centers with about 5,000 companies, and seven additional centers are under construction. The main industries in these centers are ICT-related manufacturing, information and communication, and scientific technology services.

Efforts were also made to create a business-friendly environment through regulatory reforms. The district implemented a one-stop service that drastically reduced the building use approval process from up to one month to five days from application to approval. Differentiated policies such as support for small and medium-sized enterprise development funds, market channel expansion, and overseas branch support were also implemented.

Industrial and economic regeneration policies based on urban regeneration projects were also pursued. Through strategies such as revitalizing the local industrial ecosystem, protecting small merchants, fostering social economy hubs, and creating the Seongsu Industrial Innovation Space, the formerly underdeveloped semi-industrial area of Seongsu-dong regained vitality and became a central hub of Seongdong-gu’s regional economy, often called the Brooklyn of Korea.

In particular, the Wangsimni Station area (218,000㎡), which had slow activation despite favorable location conditions, was revitalized by changing the district unit plan to create conditions for a boom in private office building construction. Recommended uses such as office and retail were planned, with 50% acceptance of recommended uses and height relaxation from 30m to 40m allowed for autonomous joint development, focusing on activating the area around Wangsimni.

Thanks to these efforts, the number of businesses and employees in Seongdong-gu increased from 25,714 businesses and 152,831 employees in 2014 to 27,868 businesses and 174,819 employees in 2018.

Supported by Seongdong-gu’s social venture policies, Seongsu-dong has also formed the largest social venture valley in Korea with about 330 companies gathered. Notably, strong mid-sized companies and famous entertainment agencies such as BMW in 2017, Trust Asset Management in 2018, electronic semiconductor manufacturer Pecotec in 2019, and Clio in 2020 have continuously relocated their headquarters to Seongdong-gu. Following regional economic revitalization, the number of employment insurance subscribers in 2018 rose to 174,390, a 10.2% increase from 2017, significantly increasing jobs.

In 2019, a media outlet selected Seongdong-gu as the best district-level city for business among 100 companies surveyed, an unusual recognition at the district level.

Jung Won-oh, Mayor of Seongdong-gu, said, “This GRDP data provided a clear opportunity to observe the region’s growth so far. We will continue to firmly establish the image of a business-friendly city through various support for business stability and spare no effort to help Seongdong-gu leap forward as a competitive industrial city.”