South Korea

The South Korea is country to the 13th biggest economy in the world and home to household names such as Samsung, LG, Hyundai and Kia. With this new found wealth, international retail brands have become a necessity for the consumer. Today, Seoul is considered a leading and rising global city, resulting from an economic boom called the Miracle on the Han River which transformed it from the damage of the Korean War to the world’s 4th largest metropolitan economy with a GDP of US$846 billion in 2014 after Tokyo, New York City and Los Angeles.

The birthplace of K-pop and the Korean Wave, Seoul received over 12 million international visitors in 2013, making it the world’s 10th most visited city and 6th largest earner in tourism.

Traditionally the retail market has been heavily concentrated in the Lotte and Shinsegae department stores which although very advanced in their development have slightly slowed the ability of many retailers to grow. With the recent introduction of a number of quality shopping malls into the market, consumer’s habits and wishes are changing and the number of mall developments and the quality of them is improving quickly leading to a new more advanced retail experience in Korea.



ECONOMIC INDICATORS*20142015F2016F2017F2018F
GDP growth
Consumer spending
Manufacturing production
Unemployment rate (%)
Won/€ (average)1,398.51,195.61,096.81,072.41,089.3
Won/US$ (average)1,052.81,077.61,029.21,007.81,001.4
Interest rates Short Term (%)
Interest rates 10-year (%)

NOTE: *annual % growth rate unless otherwise indicated. E estimate F forecast

Source: Bank of Korea

Population 50.6 MILLION (2015)
GDPUS$ 1.341 billion (2015)
Public sector balance NA
Parliament New World Party
Head of State Park Geun-hye
Election date April 2016 and December 2017
SOUTH KOREA201020112012F2013F2014F
Retail Volume5.
Retail Value7.

Busan 3,550,963
Incheon 2,801,274
Daegu 2,507,271
Gwangiu 1,463,464
Ulsan 1,135,494

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Seoul: 37.566535, 126.977969
Busan : 35.179554, 129.075642
Incheon : 37.456256, 126.705206
Daegu: 35.871435, 128.601445
Daejeon: 36.350412, 127.384548
Gwangju : 35.159545, 126.852601
Ulsan : 35.538377, 129.311360
Changwon : 37.753717, 128.895990
Seongnam : 37.444917, 127.138868
Goyang : 37.658360, 126.832020
Suwon : 37.263573, 127.028601
Yongin : 37.241086, 127.177554
Bucheon : 37.503414, 126.766031
Ansan: 37.321878, 126.830885
Cheongiu: 36.642434, 127.489032


Homeplus, Emart, Shinsegae, Lotte Mart


Samsung, LG, Shinsegae, Lotte, Galleria, ELand


Louis Vuitton, Cartier, Burberry, Gucci, Zara, H&M, Uniqlo, Gap, Abercrombie & Fitch, Ted Baker, Diesel, Tiffany. Carolina Herrera, Moncler


Coffee Bean, Starbucks, Cafe Bene, Ediya Coffee, Vapiano, Jonny Rocket, Burger King, McDonalds, Dean & Deluca

10:30 - 20:3011 - 22:00

Retail Scene

The Korean market is still in its infancy compared to those of Europe and the United States. The markets have only been open to foreign retailers in the last twenty years and the large department stores of Lotte, Shinsegae and Hyundai dominate the market place. High street retailing although changing is still very much focused around ‘mom & pop’ stores and there are only a few pockets of good quality high street retailing.

Shopping malls are a new addition to the retail scene in Korea and these in the most part are centred around Seoul and the surrounding Gyeonggido province. The high price of land and low amount of FDI in the retail market has meant that those shopping malls that were built tended to be small vertical malls with a poor tenant mix.

As the power of departments stores in the Japan market has dwindled, Korean department store owners have pre-empted this potential loss in revenue by buying up strategic pieces of prime real estate that they are able to develop their stores on as an anchor with a more western style shopping mall adding to the experience. An example of this is the Lotte Gimpo Mall which has a large Lotte department store centred around a mall with the likes of Zara, H&M, Uniqlo etc.

Historically the most prominent and most expensive high street retail area in Korea has been Myeongdong. The area is surrounded by a large office core with good transportation links and is the number one tourist destination in Korea. The area has always been the launching ground for new retail brands entering the market whether through high street stand alone stores or the giant department stores in the area.
E-commerce is becoming increasingly popular in what is the worlds most connected country and grew by just under 20% in the last year to almost $6bn USD.

There are two main ways in which retailers enter the Korean market. Although there are no restrictions allowing 100% owned foreign brands to enter the market place, historically local partner franchises / joint ventures have been the preferred method.

A handful of companies control the market with big conglomerates such as LG and Samsung both having large retail fashion arms operating domestic and foreign brands. In recent years though the trend has changed and many of the Luxury and SPA brands such as Louis Vuitton, Gucci, Burberry, H&M, Ralph Lauren, Coach, Mango and A&F have decided to open up their own direct operations.

Many luxury retailers have purchased their own high street stores in order to take advantage of a rising property market and avoid quickly increasing rental levels. There is no restrictions on foreign ownership of land .

Finding the suitable locations to open up stores can be challenging. Demand from both local and international retailers is very strong and supply is limited. Generally it takes between 6-12 months to secure a suitable property.

Lotte World MallJamsil383,4702014
Lotte Mall Gimpo 314,000 2012
I park Mall Seoul 272,157 2004
D cube City Seoul 180,000 2011
Square One Incheon 169,000 2012
One Mount Mall Il san 151,471 2013
Metapolis mall Hwasung 147,017 2010
Times Square Seoul 126,800 2009
IFC mall Seoul 89,000 2012
Coex mall Seoul 85,000 2000
Noon Square Ulsan 63,014 2013
Noon Square Seoul 24,000 2009


cosJoe FreshLadureeLululemonTiger copenhagen

Lease TermsTraditionally leases in Korea have been between 3-5 years. The trend has been for both the landlords and tenants to have flexibility. As MNCs such as H&M, Zara, Nike etc all started to open up their own run stores, this short term lease arrangement was insufficient for the investment put into the fit outs and therefore longer leases have been started to be granted. Generally now in the high streets 7-10 years is achievable and the shopping centres granting in excess of 10 years.
Rental PaymentRents are paid monthly in advance on the high streets and are normally fixed. In the shopping malls generally top up turnover rents are paid and in very rare cases turnover only is paid. In the department stores only a percentage of turnover is paid. Rental deposits here are high compared to global standards. Often deposits of 15-24 months are required. The deposit is entirely refundable at the end of the lease and as a rule of thumb, the higher rental deposit you pay, the less monthly rent is due.
Rent ReviewGenerally the first two years are fixed and then the yearly increase is linked to CPI plus a negotiated percentage.
Service Charges, Repairs and Insurance A service charge is usually payable in multi tenanted buildings and covers management fees, security and cleaning of common parts. The tenant is responsible for their own repairs and insurance of their premises.
Property Taxes and other costs 10% VAT is added to the rent
Disposal of a LeaseGenerally landlords do not allow this and all negotiations for a surrender must go through them. There is generally no automatic right to renew the lease at its termination
Valuation MethodsDue to the high deposit level which vary from building to building there is no industry standard to perform exact valuations. In order to standardise rents and to fully appreciate the real costs of the rental, C&W take a yearly 12% of the deposit rate and add that to the monthly rental to create parity between deals.
LegislationEach landlord tends to have their own standard lease format and there is no regulated body which provides advice on creating these

South Korea

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