In a situation where the vacancy rate of shopping malls did not fall, the average successful bid rate at auction last month exceeded 120%, the highest ever recorded. The picture is an empty shopping mall building on Myeongdong street in Seoul. [매경DB] Last month, a shopping mall in Yeongdeungpo-dong, Yeongdeungpo-gu, Seoul was auctioned and sold for 52.59 million won. Considering that the appraised price was 32 million won, the auction successful bid rate (the ratio of the successful bid to the appraised price) has risen to 163%.
In the auction market, the rate of successful bids is soaring. As vacant shopping malls are increasing all over Seoul in the aftermath of Corona 19, it seems to be the result of a surge in demand to buy shopping malls in major locations listed at auction at a lower price than the market price.
In August this year, the successful bid rate at the auction for shopping malls (stores, mixed-use shopping malls, and neighborhood malls) was 124.6%. This is the highest level since 2001 when statistics were collected. Even if the area is expanded to business and commercial facilities such as shopping malls, residential officetels, and hospitals, the successful bid rate at the auction last month jumped to 120.7%, up 34.9 percentage points from the previous month (85.8%).
Due to increased liquidity and government regulations focused on apartments, shopping malls were popular until last year. The record in January of last year (109.3%) was the highest ever recorded at the time. However, with the rapid spread of the COVID-19 crisis, the self-employment-centered shopping malls have been hit hard. The auction successful bid rate, which sank to the 80% level, fell sharply to 72.7% in February of this year, and many say that shopping districts were directly hit by the recession.
However, recently, the atmosphere seems to have changed once again. As the self-employed suffer hardships due to the prolonged Corona 19 crisis, and it becomes harder for tenants to pay rent, it also affects landlords, and a large number of commercial properties are being sold out in the auction market.
And many analyzes say that the sharp increase in the auction bid rate last month is the result of competition in which cheap properties stimulated the market, and demand for these properties at a low price. In fact, according to the Seoul Woori Village Store commercial area analysis service, in the first quarter of this year (January to March), the number of stores in Seoul shopping malls was 143,732, down 3880 (2.6%) from the same period of the previous year.
Lee Joo-hyeon, a senior researcher at Gigi Auction, said, “Self-employment is experiencing difficulties, which poses a great threat to store owners.
The fact that the return on investment has increased as land and building prices have continued to rise due to liquidity that has been rapidly loosened since last year also seems to have played a role.
According to the Korea Real Estate Agency, in the second quarter of this year, the return on investment in mid- and large-sized shopping malls in Seoul was 2.03%. It has risen to almost the same level as in the fourth quarter of 2019 (2.19%) before Corona 19.
Ham Young-jin, head of Big Data Lab, said, “Although commercial rental income has been weak since the COVID-19 crisis, prices have been generally strong. said.
However, there is still a strong opinion that investors should be careful about commercial auction investments that use loans excessively. This is because we do not know when the COVID-19 will completely end and the self-employment market will recover. According to the Real Estate Agency, the vacancy rate of mid- and large-sized shopping malls in Seoul, which was in the 7% range before the Corona 19 crisis, has risen to 9.5%.
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