A 92 Million Won Store Sold for 5.65 Million Won... The Decline of Dongdaemun, the 'Fashion Mecca'

Auction of Dongdaemun Shopping Center Stores at 1/20th Price
Tourists Plummet Due to COVID-19 and E-commerce Boom
Some Store Owners Told "Pay Only Maintenance Fees, No Rent"

As the direct impact of COVID-19 hit, stores of major fashion shops in the Dongdaemun area of Seoul are being sold at bargain prices through court auctions one after another. The photo shows the buildings near Dongdaemun and Dongdaemun History & Culture Park. (Not related to specific expressions in the text)

[Asia Economy Reporter Lim On-yu] Major stores in the Dongdaemun area of Seoul are being sold at bargain prices through court auctions one after another. Some stores are sold at about 1/20th of their appraised value, and there is a growing trend of stores that remain unsold even after more than ten failed auctions. Concerns are rising that the reputation of this "fashion mecca" is declining as the core of the distribution market rapidly shifts from offline stores to online platforms, and the prolonged COVID-19 pandemic has cut off the main customer base of foreign tourists.

According to Gigi Auction, a court auction specialist company, on the 19th, a 4㎡ (exclusive area) store in the Hello APM shopping mall in Euljiro 6-ga, Jung-gu, Seoul, was sold for 5,652,000 KRW. This shopping mall is a specialized mall located in the Dongdaemun fashion district. The winning bid was only 6% of the appraised value of 92 million KRW. Although it was sold for 15.3 million KRW in April last year, the sale was canceled due to non-payment, and after repeated failed auctions, it finally found a new owner this time.

Bargain sales are becoming common in the Dongdaemun area. There are many stores being sold at prices less than 20% of their appraised value. On the 18th, a 4㎡ store in the Good Morning City shopping mall in this area was sold for 8.1 million KRW, which is 16% of the appraised value of 51 million KRW, after ten failed auctions.

Stores that have at least found new owners at bargain prices are considered lucky. An 8㎡ store on the second basement floor of Millior?, scheduled for auction on the 23rd of next month, has been auctioned off 13 times without success. The current minimum bid price has dropped to 6,069,000 KRW, which is 4% of the appraised value of 138 million KRW. Including this store, 17 large shopping mall stores in the Dongdaemun area are expected to be auctioned off in February and March alone.

This phenomenon in the auction market is cited as a clear example of the decline of the Dongdaemun commercial district. With e-commerce becoming more active, the commercial district was already shrinking, and after the COVID-19 pandemic last year, the flow of foreign visitors, including Chinese tourists, stopped for over a year, leading to a continuous exit of merchants from large shopping malls in the area.

In fact, a large shopping mall in the area visited by the reporter on the afternoon of the 18th was eerily quiet with no customers. Notices seeking tenants were posted throughout the stores. Mr. A, who operates a bag and accessory store on the second floor of this building, said, "There are many days when we cannot open because there are no customers," adding, "If it were not so bad, landlords wouldn't be looking for tenants willing to operate with a deposit of 1 million KRW and no monthly rent." He explained that sales have dropped to one-tenth due to the sharp decrease in customers.

A representative from nearby A Real Estate Agency explained, "Since the fixed management fee for a 3.3㎡ store is about 60,000 to 70,000 KRW per month, many store owners are offering rent-free leases just to cover that."

As the situation worsens, vacant stores are rapidly increasing. According to the Korea Real Estate Board, the vacancy rate in the Dongdaemun commercial district sharply rose from 10.9% in the first quarter of last year to 17.7% in the fourth quarter. This means about 2 out of 10 stores are vacant, which is the highest level in Seoul except for Chungmuro.

Researcher Cho Hyun-taek of the Commercial Information Research Institute said, "Currently, the Dongdaemun Fashion Town commercial district has lost its former atmosphere," adding, "As the commercial district's atmosphere deteriorates, vacancies inside large malls are increasing, and this has led to a vicious cycle of decreasing visitor numbers."