The impact of gentrification is spreading across the country resulting in serious consequences. This phenomenon is especially noticeable in Seoul’s popular commercial districts.
The progress of Korean-style gentrification may be typical.
At first, artists flock in groups to cheaper neighborhoods. As their artistic activities become widely known, visitors slowly throng to such areas. Then, other businesses are drawn to the district, leading to commercialization.
Landlords then raise the rents, boosted by the needs of the converging people. This causes the artists and small merchants to be pushed out of such areas, resulting in their spaces being replaced by large franchise cafes or fashion brand stores.
Reports in Friday’s edition of the Hankook Ilbo, the sister paper of The Korea Times, showed how Seoul’s main business districts have been hollowed out through the process of excessive gentrification.
People have stopped moving into such areas for fear of soaring rents. As a result, there are increasing numbers of vacant stores appearing in popular districts, but building owners prefer to leave them empty for months without lowering the rents.
As of Sept. 30 last year, vacancies near Hongdae were tallied at 8.2 percent, up 4.9 percentage points from two years ago. Circumstances are similar in other commercial districts such as Daehangno, Bukchon and Seochon in central Seoul and Garosu-gil in southern Seoul.
All this stems largely from sharp rises in rent. According to Real Estate 114, which specializes in real estate information, the average cost of a month’s rent in Jongno surged 27 percent between late 2014 and late 2015, and that in Itaewon rose 23 percent in the period.
Most notable is that no one benefits once a popular district loses its unique identity and visitors stop going there to spend money. Landlords and building owners reap financial benefit until young people choose to go elsewhere in search of trendy shops and new experiences. However, in the long run such property owners also lose out as unique features of neighborhoods are lost amid the dwindling number of visitors.
In late November, the Seoul municipal government unveiled a package of measures aimed at preventing gentrification in six areas in Seoul. In these districts, the city government is offering renovation grants of up to 30 million won to the owners of old buildings if they promise not to raise the rent for a set period time.
But the effectiveness of these measures is in doubt, given that the municipal government has limitations on intervening in private contracts. In the long term, there is no other way but to seek cooperation from among tenants, landlords and district offices.