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'Changes in spending trend to affect commercial property market next year' report

Skyscrappers in Yeouido, a financial district in Seoul. (Yonhap)
Skyscrappers in Yeouido, a financial district in Seoul. (Yonhap)
The growing number of small businesses, including restaurants and mom-and-pop stores closing down their operations amid the lingering coronavirus crisis, has seriously affected commercial real estate markets as well, a report said Wednesday.

The report published by KB Financial Group suggested that commercial property markets will continue to suffer next year, along with hotel, commercial space rental, and retail businesses, among others, facing serious challenges.

The number of vacant commercial property units has risen significantly this year due to the pandemic, it said, citing a survey of 206 CEOs of commercial property brokerage firms.

Nearly a half of the respondents said the number of vacant commercial property units have increased this year in Gyeonggi Province, while 35 percent said the vacancy rate has also risen in Seoul. Buildings near office districts or commercial areas, in particular, are the ones that have suffered the most with increasing vacancy, they said.

Changes in consumption habits as well as diminished appetite for spending in the property market will continue to make retail and hotel businesses suffer next year. The logistics and data center sectors, on the other hand, were expected to relatively excel in the property market.

“The commercial real estate market in 2021 will face unprecedented uncertainty,” said Kim Tae-hwan, a researcher from market research firm KB Research, adding that the market is likely see “extreme polarization” next year.

By Kim Young-won (