A street in Seoul’s Myeongdong shopping district where three adjacent businesses have shut down since the COVID-19 outbreak. (Baek So-ah, staff photographer)
The COVID-19 pandemic and the economic slowdown have caused the number of commercial properties in Seoul to decrease by about 20,000 between the first and second quarters of the year, new data shows.
On Sept. 7, housing information provider Real Estate 114 released the results of its analysis of commercial property data tracked by South Korea’s Small Enterprise and Market Service. The analysis found that there were 370,321 commercial properties in Seoul at the end of the second quarter of 2020 (Q2), 21,178 fewer (5.4%) than the 391,499 reported at the end of the first quarter (Q1).
The Q2 decline in commercial properties in the city was observed in all business categories. There was a particularly sharp decline in restaurants, which fell from 134,041 in Q1 to 124,001 in Q2, down 10,040 (7.5%). In other words, restaurants account for around half of the decline in commercial properties over the past three months.
Along with restaurants, the number of retail outlets (including convenience stores and corner stores) decreased by 3,950, and the number of lifestyle service outlets (including print shops and hair salons) decreased by 3,473. “As an increasing number of companies allow employees to work from home because of concerns about COVID-19 infection, fewer people have been dining out and organizing team dinners. That has driven down sales, forcing the closure of restaurants that are unable to cover fixed expenses such as wages, inventory, and rent,” Real Estate 114 said.
In terms of percentage, the sectors that were hardest hit were tourism, leisure, and entertainment, including computer gaming cafés and adult establishments. Taken together, these sectors shrank by 1,260 establishments (10.8%), from 11,714 in Q1 to 10,454 in Q2. One apparent factor is that the government has placed restrictions on businesses that normally cater to a large number of customers in order to prevent COVID-19 infection clusters. Another is that some customers have stayed away, deterred by the requirement to leave their contact information on a visitors’ log.
“We expect there to be a continuing decline in the number of commercial properties in Seoul in the third quarter. If struggling small business owners are forced to close, it’s likely to cause a range of socio-economic issues including vacant storefronts and household debt. Countering those issues will probably require wide-ranging assistance from the government,” said Lee Gyeong-hui, senior analyst for Real Estate 114.
By Choi Jong-hoon, staff reporter
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