Political disruptions drive Consumer Sentiment Index to two-year low

• Following the political turmoil, the CSI dropped to 88.4 in Dec, the lowest since Nov 2022. Retail sales recorded -0.9% and -1.9% y-o-y in Oct and Nov, respectively. Same-store department sales marked 0.3% in Sept, -2.6% in Oct and 1.4% y-o-y in Nov.
• In November, monthly overseas tourist volume reached 1,361,076, down 14.9% m-o-m. The number of Chinese travellers was 297,840, dipping 24.1% m-o-m. The recent political disruptions and cold weather dulled the tourism industry.

Parnas Mall’s vacancy rate returns to a single-digit figure

• No new retail assets added to the JLL basket in Q4 2024.
• Mall vacancy rates fell to 0.9%, the lowest since Q4 2019. Except for Times Square, which did not see any changes, other malls saw decreased vacancies. Hongdae HS boasted the largest decrease in vacancy rates, from 19.7% to 9.9% q-o-q, driven by the opening of 8Seconds.

Retail investment sentiment remains subdued

• Shopping Mall and High Street rents increased by 0.2% and 0.6%, respectively. Among High Streets, Hongdae saw the largest rent increase of 1.5%. Conversely, Garosugil’s rent fell by 0.5% q-o-q due to large pockets of unresolved vacant spaces.
• HS cap rate remained at 6.2%, while that of malls rose by 10 bps to 6.5%. The most notable transaction was The Exchange Seoul Mall, which GIC sold along with its office building to the Koramco Asset Management-CTCORE consortium for circa KRW 50 billion.

Outlook: Continued sluggish domestic spending to impede High Streets’ vacancy rate recovery

• While retail investment remains bearish, only a handful of HS deals at reasonable prices are expected to occur. Despite improved liquidity following rate cuts, deal volumes are likely to remain insufficient for meaningful cap rate adjustments in the near-term.
• Some districts, like Garosu-gil, may continue to face vacancy issues due to prolonged weakness in domestic spending and severely reduced footfall. However, rents in prime districts will remain more resilient as occupancy continuously improves.