[Report] ‘Fashion Mecca’ Ewha Womans University Alley Commercial Area... Transforming into a Large-Scale ‘Officetel Village’

Clothing Store-Dense Commercial Area
24 Officetels Built in the Last 5 Years
10 Ongoing Construction Sites
Commercial District Decline Due to COVID-19 and Others

Until a few years ago, the alleys of Ewha Womans University commercial district, once filled with clothing stores and hair salons and known as the "Mecca of Fashion," are now densely packed with tall officetel buildings. New construction is underway in various places. (Photo by Ryu Taemin)

[Asia Economy Reporter Ryu Tae-min] The commercial area along ‘Ewha Womans University 1·3·5·7-gil,’ connecting the front gate of Ewha Womans University in Daehyeon-dong, Seodaemun-gu, Seoul, and the Sinchon Station intersection, was bustling with college students and teenagers until a few years ago, with clothing stores, hair salons, and tarot cafes densely packed. However, on the 9th, when the reporter visited the area, instead of the low-rise buildings under five floors that used to nest there, mid- to high-rise officetels reaching 10 to 15 floors were densely built. On the first and second floors of the buildings, fitness centers and real estate agencies frequently used by officetel residents were noticeable. New officetel construction was still actively underway in various spots. Until 2010, the Ewha Womans University commercial district was called the ‘Mecca of Fashion,’ but it is now transforming into an officetel village.

According to Real Estate 114 on the 10th, in the past five years, a total of 24 newly built officetels with 1,876 units have been constructed in the Daehyeon-dong area adjacent to the front gate of Ewha Womans University. This year alone, four officetels with a total of 408 units have been completed and residents have started moving in. Sales offices for the sale and rental of new officetels were easily found throughout the alleys. Currently, construction of 10 new officetels is underway.

The commercial area around Ewha Womans University has seen a sharp rise in vacancies as emerging nearby commercial districts rapidly develop and even Chinese tourists have stopped visiting recently due to COVID-19. Shops with "For Lease" signs are noticeable on every street corner. (Photo by Ryu Taemin)

Emerging Commercial Districts and COVID-19 Impact Increase Vacancy Rates... Building Owners Rush to Sell Properties

The rapid proliferation of officetels in the alleys near Ewha Womans University began as the local commercial district declined. As emerging commercial districts rapidly rose, the central axis of the northwestern Seoul commercial district shifted from Ewha and Sinchon to nearby areas such as Hongdae, Hapjeong, and Mangwon, sharply reducing the influx of young people visiting this area. Additionally, due to the impact of COVID-19 starting last year, visits by Chinese tourists stopped, and with the shift to remote classes, most college students who lived nearby disappeared.

According to a survey by the Korea Real Estate Board, the vacancy rate for medium- to large-sized commercial spaces (over 330㎡ in total floor area) in Sinchon and Ewha reached 13.2% in the second quarter of this year. This is 2.7 percentage points higher than the 10.5% recorded in the same period last year when COVID-19 began. In the first quarter of this year, it jumped to 13.3%, setting a record high. A representative from real estate agency A in Daehyeon-dong said, "As rental income halved in a few years, many building owners sold their properties at low prices," adding, "Development companies have increasingly purchased these properties and redeveloped them into officetels."

Despite Large-Scale Supply, Vacancy Rates Remain Low... “Popularity Will Increase When College Students Return”

Considering the concentrated large-scale supply of officetels in a short period, the vacancy rate is relatively low, according to local real estate agents. A representative from officetel B, which moved in in 2019, said, "Although the current vacancy rate is about 30% due to many tenants’ contracts recently expiring, it is usually much lower," adding, "I understand that vacancy rates in nearby places range from about 10% to 30%." A representative from nearby officetel C said, "With the new semester starting and face-to-face classes increasing at nearby universities, there are currently almost no vacancies," and added, "Originally, the ratio of office workers to college students was about 7 to 3, with office workers overwhelmingly more, but recently, as college student tenants have returned, their proportion is increasing."

However, as competition intensifies, monthly and jeonse (lump-sum deposit lease) prices are generally declining compared to before. The head of real estate agency D said, “At the beginning of the year, several complexes lowered monthly rents by about 100,000 to 150,000 KRW compared to last year,” adding, “Currently, units with exclusive areas of about 24 to 28㎡ are traded at deposits of 10 million KRW and monthly rents of about 750,000 to 800,000 KRW.”

While demand for officetels continues to increase, vacancy rates for commercial spaces are rising, and the industry expects the trend of officetels replacing commercial buildings to continue. Seon Jong-pil, CEO of Commercial News Radar, explained, “Ewha Station is very popular among office workers around Severance and Gwanghwamun areas due to convenient transportation such as Subway Line 2 and buses,” adding, “While the commercial district is getting worse, officetel rental income remains high, so this phenomenon is expected to continue.”