Sluggish domestic demand drives consumption indicators down

• The CSI fell, recording 103.6 in July, 100.8 in August and 100.0 in September, with concerns over dull domestic demand. Retail sales read -2.2% in July and -1.3% in August y-o-y. Same-store department sales reached 5.0% in June, -6.4% in July and 4.4% y-o-y in August.
• Monthly overseas tourist numbers reached 1,563,221 in August, up 43.5% y-o-y. The number of Chinese travellers in August was 505,559, an increase of 94.7% y-o-y. High Streets popular with foreign visitors are showing relatively higher demand.

Noon Square finally sees improved occupancy

• No notable Shopping Mall or High Street stock was added to the basket in Q3 2024.
• Shopping Malls saw a vacancy rate of 1.5%, a 53 bps contraction q-o-q, with Noon Square’s vacancy dropping sharply from 29.8% to 14.2% as JustCo and Wiggle Wiggle moved in. For High Streets, only Hongdae’s vacancy rate increased to 19.7% as Chicor moved out.

A deal worth over KRW 100 billion closes during the quarter

• Shopping Mall (SM) and High Street (HS) rents went up by 0.7% and 0.8% q-o-q, respectively. Myeongdong saw the largest rent growth at 1.5% q-o-q. Garosu-gil and Hongdae rents remained flat q-o-q, while others observed upticks: 1.0% in Gangnam and 0.5% in Cheongdam.
• Market yields of SM and HS noted 6.4% and 6.2%, respectively. Notably, First C&D purchased Homeplus Sosa Branch for KRW 41.5 billion, and POSCO E&C sold Park Avenue Enter 6 Hanyang University branch to GRE Partners Asset Management for KRW 112.1 billion.

Outlook: Offline retail rebounds, led by tourist hotspots

• Amid weak investment sentiment, the majority of High Streets deal volume will be between individuals rather than institutional investors. However, with additional rate cuts expected, the retail transaction market is predicted to perk up gradually.
• After the initial recovery from COVID-19, districts with substantial catchment were quicker to recover. With the recent increase of foreign tourists and a decline in domestic purchasing power, districts attracting foreign visitors are expected to perform better.