Shopping District in Gangnam Show Best Return

According to an investigation, the average return on investment (ROI) of office building or large shopping center, located in major seven cities (Seoul and other 6 cities), reached the annual 12∼13%.

Also, the rental fees of the nationwide large buildings (1 year rental) exceed the average 4 million won per Pyong.

The ministry of construction and transportation (MOCT) said that there were such results of return on investment and rental fee for 1500 dongs of office buildings and large shopping center in 7 major cities including Seoul, Busan, Daegu, Incheon, Daejeon, Gwangju and Ulsan on the basis of July 1.

The return on investment (ROI) adds the return on capital calculated by the price increase of the building and the earning rate of income calculated by revenues of rental frees.

According to MOCT, the average return on investment (ROI) of seven cities estimated at 12.15% for office buildings and 13.02% for the larger shopping center.

For ROI of the office building by area, Seoul has the highest ROI of 14.29% and Gwangju has the lowest ROI of 3.03%.

The ROI (16.08%) of Youido and Mapo in Seoul is higher over the downtown(14.32%) of Seoul or Gangnam(14.16%).

In particular, for ROI, the buildings located in front of the National Assembly building in Youido and Mapo have the highest rate of 20.08%.

For the large shopping center, Seoul showed the highest rate of 15.84%, but Daejeong showed the lowest rate of 6.91%.

In Seoul, Gangnam (18.15%) exceeded the average. There are Seoul downtown (15.72%), Sinchon (14.65%) and Yeongdeungpo (13.33%).

`Guarantee monthly rent` of office buildings and large shopping centers was 80.4% and 91.5% respectively.

In terms of the rental fees converted to a deposit basis (1㎡ base), the office building showed the average 1,291,000 won (4,269,000 won per Pyong) and the large shopping center showed the average 1,230,000 won (4,066,000 won per Pyong).

Park Gwang-Seo, assistant manager of land price system said “The investigation was conducted for a purpose of providing ROI information in order for investors to invest to the downtown buildings or shopping centers. We will conduct the investigation regularly and disclose its results.

Jae-Seong Hwang jsonhng@donga.com