[비즈한국] The construction of Lotte Shopping’s023530 complex shopping mall in Sangam-dong is being delayed, largely due to a slow licensing process by the Seoul Metropolitan Government. Lotte Shopping aims to begin construction in the second half of 2026 following the completion of these procedures. However, some in the retail industry argue that there is no real benefit to building the mall, as shopping trends have shifted from offline to online, diminishing the competitiveness of such large-scale complexes.
Furthermore, large-scale complex malls require significant capital investment. Considering Lotte Shopping’s recent financial structure, such a massive capital outlay could be burdensome. Amidst this, Lee Jae-myung, the Democratic Party’s presidential candidate, has historically opposed the construction of complex malls by large conglomerates. If he is elected president and maintains his past stance, the entire project could face a red light.
Lotte Shopping purchased the 20,644-square-meter (approx. 6,245-pyeong) plot in Sangam-dong from the Seoul Metropolitan Government for 197.2 billion won in 2013. The company originally planned to build a large-scale complex mall there, but construction was delayed due to the sluggish licensing process. This was because the late Seoul Mayor Park Won-soon had instructed the company to reach an agreement on mutual growth with local merchants before proceeding with construction.
With the election of Mayor Oh Se-hoon in 2021, the project began to gain momentum. However, to date, construction has yet to commence. Lotte Shopping signed an agreement with the Mapo District Office to use the site as a public parking lot from 2025 to 2026, and the land is currently being utilized for that purpose. A Lotte Shopping representative explained, "We are targeting the second half of 2026 for construction, and the schedule remains subject to adjustment through mutual consultation."
Unlike in the past, the retail industry does not hold a positive outlook for the Sangam-dong project, as current trends favor online shopping over offline. Even if the mall is completed, there is no guarantee it will generate expected profits. Some analysts point out that Homeplus's recent entry into rehabilitation proceedings was also due to its failure to adapt to the online shopping shift.
Some in the industry suggest that investment in online channels is more necessary than building large offline complexes. Lotte Shopping itself has struggled to see significant returns in its offline segments. According to business reports, revenue from Lotte Shopping’s department store division fell by 0.51% from 3.3364 trillion won in 2023 to 3.3193 trillion won in 2024, while the discount store division saw a 2.76% decrease from 5.7347 trillion won to 5.5765 trillion won in the same period. Projects related to complex malls are categorized under the department store division.
Lotte Shopping’s financial situation cannot be ignored either. Construction of a complex mall requires a massive influx of cash. Although Lotte Shopping improved its financial structure last year through asset revaluation—reevaluating the value of its land holdings—this did not increase actual cash on hand. Following the revaluation, the debt ratio dropped by 53.81 percentage points from 182.79% at the end of 2023 to 128.98% at the end of 2024. However, cash and cash equivalents actually decreased by 2.19%, from 1.5897 trillion won to 1.5548 trillion won, making the construction cost a potential burden.
Moreover, it is difficult for Lotte Shopping to generate significant profits in the near term. Seo Min-ho, a senior analyst at Korea Investors Service, commented on Lotte Shopping: "Due to the operation of a large-scale offline store network, the burden of fixed costs—such as labor, rent, and commissions—is high. With reduced foot traffic due to shifts toward online purchasing, changing consumption patterns, and intensified competition across retail sectors, the profit base for major business divisions has weakened compared to the past." He added, "Considering the investment burden needed to restore competitiveness in the retail market, it is difficult to expect a visible reduction in financial pressure in the near future."
For these reasons, rumors are circulating that Lotte Shopping might be intentionally delaying the construction. Yet, completely withdrawing from the project is also difficult. Having already purchased the land, the company must find a use for it; it cannot remain a parking lot indefinitely.
The presidential election serves as another variable. Democratic Party candidate Lee Jae-myung has expressed a negative stance on complex malls in the past. In February 2017, ahead of the presidential primary, Lee stated, "I oppose the entry of Lotte complex malls in Sangam-dong, Seoul, and Jeonju, and I oppose all future mall developments by retail conglomerates," adding that they "rob small and medium-sized merchants of their livelihood and devastate local commercial districts."
As Lee is currently leading in various opinion polls, his election could create setbacks for Lotte Shopping’s plans, although he has not issued a specific pledge regarding these malls during the current campaign.
Another variable is the local elections scheduled for next June. Since the project requires licensing from the Seoul Metropolitan Government, the Seoul Mayor's intentions are critical. If the next mayor opposes the mall, the project could return to square one.
Despite negative forecasts, Lotte Shopping maintains its position that construction will begin in the near future. The retail industry is focused on what the outcome of Lotte’s decision will be. The aforementioned Lotte Shopping official stated, "Once the district unit planning procedures are completed in the second half of this year, we will proceed with the architectural licensing process and plan to begin full-scale construction after completion in the second half of 2026," adding, "It is difficult to comment on political issues."