The popularity of commercial properties in South Korea’s auction market has waned significantly. (Image courtesy of Yonhap)
SEOUL, Feb. 3 (Korea Bizwire) — The popularity of commercial properties in South Korea’s auction market has waned significantly, with both successful bid rates and price ratios falling as businesses struggle with decreased sales during the economic downturn.
According to data from GG Auction, a specialized auction data firm, Seoul saw 258 commercial property auctions from January 1 through January 24, just before the Lunar New Year holiday. Only 40 properties were successfully sold, representing a bid success rate of 15.5% – essentially only three out of every 20 properties found new owners.
The successful bid rate for commercial properties in Seoul has been hovering around 10% since dropping to 15.9% in September last year, followed by 15.6% in October, 12.3% in November, and 12.2% in December.
The price ratio – the winning bid price compared to the appraised value – also declined in January, dropping 3.0 percentage points from the previous month to 68.1%. The average number of bidders per property remained low at 1.38, continuing a trend of fewer than two bidders since August last year, when it averaged 1.68.
Similar patterns emerged in the broader metropolitan area. In Gyeonggi Province, the successful bid rate decreased slightly to 14.8% in January, while the price ratio fell to 48.1%, dropping below 50% for the first time since March 2023. This means winning bids are securing properties for less than half their appraised value.
The average number of bidders in Gyeonggi Province has remained in the two-person range since June last year, when it peaked at 3.82. Incheon reported a successful bid rate of 16.5% and a price ratio of 65.6% in January, showing slight improvements from December’s figures of 16.5% and 58.1% respectively.
Industry analysts attribute these trends to diminished demand for commercial properties amid the economic recession. According to the Korea Real Estate Board’s fourth-quarter commercial real estate market analysis, the commercial property rental price index declined from the previous quarter due to weakened consumer spending. Investment returns for medium-large and multi-tenant commercial properties also decreased.
“Even properties in relatively prime locations, such as those within new town complexes, are failing to sell at auction due to the severe economic conditions, leading to an accumulation of unsold inventory,” said Lee Ju-hyun, a senior researcher at GG Auction.
M. H. Lee (mhlee@koreabizwire.com)
