Oversupply of commercial space: Floor area ratio and construction costs + imbalance between supply and demand
In Seoul and the metropolitan area, and even in major provincial cities, the supply of commercial properties far exceeds market demand. In particular, Seoul is promoting high-rise reconstruction by increasing the floor area ratio, but this is causing construction costs to skyrocket and homeowners are feeling a huge burden. As the supply of commercial space increases, the vacancy rate is increasing. New commercial spaces remain vacant because supply and demand are not in balance.
Problem: Rapidly increasing vacancy rates + decreasing economically active population
Wherever you go in the metropolitan area, including Wirye, Gwanggyo, Siheung, Cheongna, Magok, Hanam, and Samsong, there are many new commercial buildings that have been vacant for years. This means that there is an excessive supply of commercial buildings. From 2000 to 2019, 30 million square meters of commercial land was additionally supplied in Seoul. However, the economically active population in Seoul is gradually decreasing, so even if the supply of commercial buildings increases, demand is decreasing.
Solution? Floor area ratio adjustment + supply timing and demand analysis
It is necessary to reduce the burden of construction costs by appropriately adjusting the floor area ratio and to balance supply and demand. The Ministry of Land, Infrastructure and Transport needs to adjust the supply period and review the appropriate demand. This can reduce the vacancy rate.
There are also many vacancies around Pangyo. Even the landlords I know are having a hard time recently, so it seems like something is going to happen in the real estate market soon. Of course, many people say, "Why don't we just lower the rent?", but most building or commercial space owners take out loans like they would buy a house to purchase the space, so it's actually not easy to rent it out cheaply as interest rates rise... (Of course, it's better than not renting it out, so there are many cases where they give up their leases and give up their leases.)
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