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Coex renovation fails to clear skepticism

High rent, unattractive location raise doubts over profitability of Asia’s largest underground mall

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Published : 2014-03-07 20:19
Updated : 2014-03-07 20:19

With plans for a Bitcoin ATM, global and domestic fast fashion brands, and trendy restaurants, the Coex underground shopping mall under renovation in affluent Samseong-dong, southern Seoul, is determined to win back young and finicky shoppers.

Partially opened on March 1 with a grand opening to take place by the end of the year, the shopping mall has been the talk of the town for the past few months. But experts have also raised concerns about the prospects for tenants. 
An aerial rendering of the renovated Coex Mall, Asia’s largest underground shopping complex, which will reopen in December (Coex)

The Korea International Trade Association, the operator of Coex Mall, on Friday said the country’s first Bitcoin automated teller machine was installed at its Cafe Sedona. The ATM exchanges Bitcoins for Korean won notes.

The ATM is expected to draw tech-savvy people who are already trading the virtual currency online or are planning to dip into it.

In addition to the ATM, domestic specialty store retailers of private label apparel brands including 8ight Seconds, H.Connect and Around the Corner have opened to attract fashion-conscious youngsters.

Global SPA giants including Zara, H&M, Gap and others will soon open as well. “All the famous SPA brands will be in Coex, which is the latest fashion mall in southern Seoul,” said a fashion retailer. Famous restaurants including the hip bakery “Pain de Papa” and several Japanese diners have also found a place in the underground shopping mall.

However, some are questioning the potential profitability of the shopping mall.

The rent has not been revealed but rumors have it that the monthly fee exceeds 1 million won and includes a deposit of 100 million won for every 3.3 square meters. “If you have a decent-sized store there you will have to generate 500 million won in sales a month to afford the rent,” a realtor close to the issue said. “That’s not feasible for even the most successful brands,” he added.

Another real estate expert claimed that Coex was never positioned as a shopping place and that placing all the trendy shops there will not draw youngsters.

“You go there to see a movie, let the kids visit the aquarium. There are business conventions and exhibitions held so you may need some good restaurants. But you just don’t go there to buy a pair of sneakers,” a real estate expert said.

He said that businessmen set up “antenna shops” there in order to observe consumer trends, not to make actual sales profits. “I don’t think Coex will be able to compete with the new Lotte shopping complex that is to open in May in Jamsil, some 2-3 kilometers away from Samseong-dong, nor with the Gangnam Station shopping district, which is near to Coex, too,” he went on.

“I don’t think small to mid-sized businesses are likely to see good performance results there.” 

By Bae Ji-sook (baejisook@heraldcorp.com)

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