Recovery of Seoul Commercial Districts After Social Distancing Lifted... Gangnam Recovers Fastest

by Kwak Minjae

Published 18 Apr.2023 16:35(KST)

Since the second quarter of last year, when social distancing measures were lifted, Seoul's commercial districts have been showing signs of recovery. The increase was particularly notable in business districts with high income and consumption levels and abundant foot traffic, such as the Gangnam area. The commercial market showed varying degrees of recovery depending on the region and industry, with growth mainly in lifestyle services and restaurants.

[Image source=Yonhap News]

On the 18th, Real Estate R114 analyzed the trends of commercial establishments in Seoul by industry through its commercial real estate solution 'RCS (Realestate Commercial Solution)' and found that the number of commercial establishments has steadily increased since the second quarter of last year. The number rose from 346,229 in Q2 to 361,490 in Q3 and 377,724 in Q4.

The number of commercial establishments increased across all areas of Seoul, with significant growth in regions with dense office facilities and high foot traffic such as the Gangnam 3 districts, Gangseo, and Mapo. Among these, Gangnam, Seocho, and Songpa districts, where individual card spending was about 10 million KRW (Q4) and consumption levels are high, saw an increase of 17,259 commercial establishments in Q4 compared to Q1 last year. In contrast, Dobong and Gangbuk districts, which have relatively lower consumption levels and are mostly residential, had fewer commercial establishments and smaller growth compared to other areas.

[Image provided by Real Estate R114]

By industry, commercial establishments related to daily lifestyle services such as food, laundry, and beauty saw significant growth. The food industry increased by 24,988 establishments (25%) from 100,783 in Q1 last year to 125,771 in Q4, while lifestyle services rose by 19,403 establishments (32%) from 60,276 to 79,679.

On the other hand, retail sectors handling clothing, cosmetics, and furniture only increased by 10% from 98,031 establishments in Q1 to 107,460 in Q4 last year. This is analyzed to be due to the recent shift of the consumer market to online, limiting the growth of offline retail establishments.

Kyunghee Yeo, Senior Researcher at Real Estate R114, said, “The time it takes for commercial districts to recover will vary depending on factors such as local consumption levels, foot traffic, commercial district characteristics, and industry. Considering the contraction of consumer sentiment and the significantly reduced number of foreign tourists compared to before COVID-19, it is expected to take a considerable amount of time for commercial districts to become fully revitalized.”