"Completely Collapsed" to Spectacular Revival from the Ashes... Major Shifts in Seoul’s Commercial Districts [Real Estate AtoZ]

Once a Wasteland During the Pandemic, Now a Hub: Myeongdong Recovers with 7% Vacancy Rate
Seongsu-dong Sees 226% Surge in Foreign Card Sales, Emerges as a K-Fashion Hotspot
Gangnam Also Rebounds on Medical Tourism, Vacancy Rate Drops by 5 Percen

Myeongdong, once facing a collapse with a vacancy rate soaring to the 50% range, is now experiencing a spectacular revival, with K-beauty and medical sectors leading the commercial district and vacancy rates dropping to the 7% range. Seongsu-dong has also solidified its status as an 'invincible commercial district,' with foreign sales surging thanks to K-fashion and pop-up stores. In addition, the Gangnam commercial district is showing signs of recovery driven by demand for medical tourism, and Chinese brands are rapidly expanding their presence in Korea. These trends indicate that K-content is driving changes across the entire retail market.

Myeongdong Rises from the Ashes, Vacancy Rate Recovers to 7%

Last month, Seoul's Myeongdong Street was bustling with foreign tourists ahead of the Chuseok holiday. Yonhap News.

According to the third-quarter domestic commercial real estate report recently released by CBRE Korea, the world’s largest real estate advisory firm, the global popularity of K-culture-such as K-beauty and K-food-has pushed the number of inbound foreign visitors above pre-pandemic levels (108% compared to 2019), reshaping the landscape of key commercial districts. From January to August this year, the cumulative number of inbound foreign visitors reached approximately 12.38 million, a 16% increase compared to the same period last year. Domestic consumer sentiment has also been on the rise for five consecutive months (with the August Consumer Sentiment Index at 111), further fueling the recovery of commercial districts.

Myeongdong has seen the most dramatic transformation under these circumstances. During the COVID-19 pandemic, Myeongdong, which was highly dependent on foreign tourists, saw its vacancy rate soar to 40-50%, effectively reaching a state of collapse. However, as of the second quarter of this year, Myeongdong’s vacancy rate has dropped for four consecutive quarters, entering the 7% range. This marks its lowest level since 2018, signaling a remarkable comeback.

The report attributes this turnaround to a fundamental shift in the district’s business structure. While large food and beverage stores targeting tourists once dominated the area, fashion, beauty, and medical sectors have rapidly filled these spaces in recent years. In the third quarter, the beauty brand HEMECO newly entered the market, and Olive Young, which already operates eight stores, recently signed a contract for its ninth location, cementing Myeongdong’s status as the hub of K-beauty.

'Invincible' Seongsu, Expanding Territory with K-Fashion

Seongsu-dong street view. The Asia Business Daily.

Seongsu-dong’s status as a core commercial district remained strong in the third quarter. Once an area of handmade shoe factories, Seongsu-dong has emerged as a 'mecca of pop-ups' and a battleground for global flagship stores, maintaining its position as a key retail district in Seoul thanks to high tenant demand. In the third quarter, new K-fashion and beauty brands such as General Idea, Igukids, and Laka opened stores in the area. The influx of foreign tourists has been particularly explosive, with foreign card spending in Seongsu rising by an astonishing 226% compared to the previous year.

However, the district is also experiencing intensified gentrification, with rents and key money surging after years of explosive popularity. According to the report, some tenant demand has started to spread from the central Seongsu Station area to nearby secondary commercial zones such as Bukyeonmujang. This suggests that the scope of the Seongsu commercial district is likely to expand gradually in the future.

Gangnam and Chinese Brands Also in the Spotlight

Meanwhile, the Gangnam commercial district has also reversed a year-long rise in vacancy rates, dropping by 5 percentage points in the second quarter to reach the 7% range. The entry of major retailers such as Olive Young Central Gangnam Town and Musinsa Store Gangnam, along with increased activity from medical businesses (such as Secret Clinic and Gangnam Unni) catering to foreign visitors seeking cosmetic and dermatological treatments, has contributed to the improvement in vacancy rates.

Another major trend in the third-quarter retail market is the accelerated expansion of Chinese brands in Korea, led by Xiaomi (with stores at Yeouido IFC, Guro NC, and Magok's third branch), the milk tea brand Chage, goods-focused Miniso, and Pop Mart. CBRE Korea stated, "The recovery of domestic consumer sentiment and the increasing influx of foreign visitors are expected to continue in the second half of the year," adding, "The retail industry as a whole will continue to see robust expansion, particularly in fashion and beauty."