Gentrification: A Battle Without Winners
Recently, retailers around Mangwon, an area becoming well-known for its uniqueand intimate restaurants and shops, asked people not to use the name Mangridan-gil which derived from Itaewon’s Kyungridan-gil. This came as a surprise since common perception was that the name Mangridan-gil was being used commercially to help increase sales. Actually, this paradoxical phenomenon shows the fear of being thrown out from workplaces due to sharp rent hikes among small-scale business owners—so called “gentrification.” Gentrification originally means the revitalization of business in old downtown area due to the rush of middle and upper classes. However, it now incorporates the problems of indigenous sellers being kicked out from their nests because of rapid rent hikes, as the problems have become a serious social issue.
Phase Ⅰ: Revitalization
The first phase of gentrification is the influx of artists and small stores into the old downtown because of cheap rent—people look for “fixer-uppers” to change the district. Then, they form a distinctive and interesting culture which attracts visitors. As a result, what was once the declined downtown can revive the local economy. Representative areas that went through this phase include regions around Hongik Universtiy, Kyungridan-gil, and Garosu-gil. Meanwhile, due to the development of the internet and its speedy transmission of information, these “blossoming” places become even more popularized: recently, this is even more so thanks to social media platforms such as Facebook and Instagram.
Phase Ⅱ: Kicked Out of Their Nests
However, as a business district becomes publicized, landlords who had leased the building on low rent ask tenants for much higher rent than before. Of course, it is reasonable to demand the raise of rent in a capitalistic society. It is a natural request which follows market logic. The rent begins to skyrocket and franchises that are subsidiaries of big corporations drive out the people who invigorated the local economy in the first place. Eventually, the business zone loses its individuality and uniqueness going downhill.
This waning process is referred to as the cultural whitening event. Apgujeong Rodeo Street is one of the prime examples of an area in this stage. It was once one of the central commercial areas of Seoul, famous for its unique fashion street. However, lessors who showed the native businesspeople the door made the street devastated with the huge capital of major companies. Today, you can see lots of vacant properties on the street waiting to be leased; the vacancy rate as high as approximately 30%. As the rent is not low enough to redeem the risk, businessmen will not take the leap of opening stores in a declined area.
A Safety Net Stretched Thin
There are two main causes for the problem of gentrification. The first cause is the insufficient legal system to protect the lessee, the underdog in a leasing contract. For example, clauses for legal protection concerned with a premium—a conventional cost which the new lessee pays to the old one for the merits of business—were not officially legislated until May, 2015. Due to the lack of the clauses, lessees could do almost nothing to get a premium when lessors tried to be in cahoots with the new lessee willing to pay more. Second is the lack of discussions on mutual growth between a lessor and a lessee. That is, there has been little public debate dealing with the long term development of local business districts considering the aftermath of gentrification such as recession and rent fall as seen in the case of Apgujeong. The first official agreement of mutual growth which is based on the participation of both lessors and lessees was only recently instituted by the Seongdong-gu Office in 2016.
Efforts to Resolve
On the positive side, both the central and local government authorities are actively trying to solve the problems of gentrification. The National Assembly is discussing an amendment of “The Commercial Building Lease Protection Act,” namely revising the term of requesting renewal of lease contracts from the present five years to ten, as well as restricting the increase of rent to be no higher than 9%. Among the local authorities, the Seongdong-gu Office is especially showing a good example in preventing the problems of gentrification. In many ways, it tried to cope with gentrification around Seongsu-dong (an area in Seongdong-gu) when artists and venture businesspeople from backwater replaced the aging factories and houses with an unique attraction. The district office established several effective countermeasures, such as enacting an ordinance for lessee protection; revising the district unit plan of Seoul to head off the entry of franchises; instituting a public lease system; organizing a mutual growth consultative group consisting of the government, the lessors and lessees; and benefiting the lessor who joined a mutual growth agreement.
Handling gentrification is a very sensitive issue in that it involves a contradiction between a lessor’s property rights and a lessee’s occupation rights. However, in the present system, a lessor’s right is overly dominant over that of the lessee, and it provides no protection for retailers who created the regional identity and rejuvenated the local economy. Also, in the long term, the lessor will fall into their own trap due to the cultural whitening event. Thus, the feeling of solidarity for a win-win situation should be formed through a public hearing with the participation of all citizens, lessors, lessees and government all participate. Only then will proper policies be established. As imprudent development blinded by speculative lust ultimately loses the driving force for progress in the long term, we should pursue sustainable mutual growth. Otherwise, the street where culture used to flourish will become overwhelmed by huge capital, with only scars in its wake.
Song Taek-yul (Photography Reporter)