Commercial real estate, including retail spaces and officetels, is facing a downturn due to high interest rates and vacancy pressures. This trend is reflected in the auction market, which has seen a record number of listings. However, prime commercial properties in Seoul, driven by expectations of redevelopment, are still fetching premium prices.
According to the June 2026 Auction Trends Report from Jiji Auction, the number of commercial property auctions nationwide reached 8,268 last month, marking a nearly 9% increase from 7,579 in the previous month, the highest monthly total on record. Retail spaces and officetels accounted for the largest share of these auctions.
Despite the increase in auction listings, the success rate has been disappointing. The nationwide auction success rate for commercial properties stood at 20.0%, down 0.3 percentage points from the previous month. The average winning bid rate was 51.3%, a decrease of 1.9 percentage points from 53.2% the prior month, indicating that properties were selling for about half of their appraised values. The average number of bidders per auction was just 2.8.
This decline in the commercial real estate market is reflected in the auction metrics. Retail spaces are sensitive to the performance of small businesses, rental income, and vacancy rates. With high interest burdens and slow consumer recovery, expectations for rising rents are low. Officetels are also losing investment appeal as they straddle the line between residential and income-generating properties, contributing to the increase in auction listings.
The situation is even more challenging in regional markets. In Sejong, the auction success rate for commercial properties was only 29%, while it was 38.7% in Gangwon, 42.3% in Jeonbuk, and 42.4% in Gyeongnam.
In contrast, Seoul's commercial property auction success rate was 71.7%, up 3.8 percentage points from 67.9% the previous month. This figure is over 20 percentage points higher than the national average of 51.3%, indicating strong demand for prime properties in the capital.
Notably, commercial properties in redevelopment areas showed robust performance. Retail spaces within a redevelopment apartment complex in Dohwa-dong, Mapo-gu, and those in the redevelopment promotion zone around Cheonho-dong, Gangdong-gu, were sold for an average of 1.5 times their appraised values. Additionally, five small officetels in Gwangjin-gu were all auctioned at around 100% of their appraised values.
Looking ahead, the disparity in auction performance across regions is expected to widen. Particularly, commercial properties in transit-oriented developments, redevelopment areas, and large-scale surrounding commercial districts are likely to see increased selective demand.
However, potential buyers of commercial properties in redevelopment areas must consider various factors, including the association's regulations, membership status, recognition of sale rights, compensation for business operations, and legal relationships. Delays in redevelopment projects or unfavorable changes in property placement and sale conditions could diminish anticipated development profits.
An industry insider noted, "The record number of commercial property auctions indicates that assets unable to withstand current conditions are entering the market. The commercial properties in Seoul's redevelopment zones are being evaluated differently due to development expectations and surrounding demand."
He added, "The profitability of commercial property auctions varies significantly based on location and legal relationships. Rather than simply following properties that sold for higher than their appraised values, it is essential to assess the stage of redevelopment projects, membership status in property associations, and future rental demand."
* This article has been translated by AI.
Copyright ⓒ Aju Press All rights reserved.