Foreign Patients' 22.8 Trillion Won Ripple Effect on Production... The Evolution of 'Hospital + Cafe' Mixed-Use Buildings

Commercial real estate firm Cushman expands advisory services on combining spaces
Experts in different fields join forces to bring diverse businesses together under one roof
"Foreign tourists are flocking in, but accommodation alone cannot generate

#1. Runport, a running-focused complex in front of Tojeong Interchange in Mapo-gu, Seoul, which opened in June. Just a 30-second run from the building takes you to the Han River running path. On weekdays, office workers can show up without any gear, borrow Adidas sportswear and running shoes, and head out for a run. Afterward, they can enjoy contrast therapy, alternating between a hot sauna and a cold bath, or take a cold plunge in the same building.

#2. The Grand Lotte Seoul, a five-star hotel in Sogong-dong, Jung-gu, Seoul, recently underwent a major renovation for the first time in 18 years. It boldly removed guest rooms on the eighth and ninth floors of its Main Tower, replacing them with medical and wellness facilities, including a dermatology clinic, as well as a spa.

A plastic surgery clinic is located in a building in Nonhyeon-dong, Gangnam-gu, Seoul. Photo by Kang Jinhyung.

As businesses increasingly combine different sectors to reduce vacancies and boost property values, global real estate advisory firms such as Cushman & Wakefield and CBRE are successively setting up dedicated teams to handle combinations of hospitals, wellness services and retail. With shopping malls, supermarkets and retail properties in city centers struggling, businesses have begun turning to "one-stop services."

According to industry sources on October 27, Cushman & Wakefield Korea, which was the first to set up a dedicated team in 2022, plans to expand and reorganize its Medical Team into a Medical & Wellness Team soon, increasing its advisory work on combining spaces for hospitals, pharmacies, cosmetics and fitness. Rather than having one company offer a department-store-style lineup of services, the recent trend is for specialized businesses in different fields to join forces and bring their services together in one space.

Assistretch, a stretching studio that helps relax muscles, has opened as a shop-in-shop inside Buffet Ground, a fitness center in the basement of the Seoul Finance Center in Gwanghwamun. It offers cross-member discounts and bundled packages.

Runport, a building in Mapo developed by fitness company Buffet Seoul, brings together facilities needed before and after exercise. It houses the running hub Runport, a fitness center, a sauna, and spaces for stretching and dining. The facilities span from the second basement level to the seventh floor above ground, as well as the rooftop. Runport has partnered with Adidas to rent out sportswear and running shoes. Visitors can borrow clothes and shoes, run along the Han River, then return to the building to do strength training or use the sauna and cold plunge. The facility offers both the opportunity to try Adidas products and a place to exercise. "As more consumers become interested in health and wellness, spin-off businesses keep emerging, such as hospitals selling package deals," a real estate industry official said.

The sector attracting the most capital is medical stays, which combine accommodation and hospitals. Profitability is also behind The Grand Lotte Seoul's decision to renovate floors 7 to 21 of its Main Tower, reduce the number of rooms while increasing their size, and convert rooms on the lower floors, the eighth and ninth, which were less popular with guests, into medical and convenience facilities. Attracting foreign medical tourists who need accommodation and recovery before and after procedures can increase average spending per guest and secure demand for longer stays.

Efforts to maximize space efficiency are continuing in high-street buildings in areas popular with foreign tourists and younger people, including Myeong-dong, Gangnam Station, Hongik University Station, Seongsu-dong, Hannam-dong and Dosan Park. "Foreign tourist demand, rather than domestic demand, has been driving the commercial real estate market recently," said Jeong Eun-sang, head of the research center at NAI Korea. "Land prices have already risen considerably around hotels near subway stations and along major roads, making it difficult to achieve the desired returns from accommodation alone. That's why hospitals, which can afford to pay higher rents, are being added."

Oakwood Premier COEX Center in Samseong-dong, Gangnam-gu, has leased about 1,650 square meters of space on its first basement level to a clinic. Under an agreement with Grand Korea Leisure (GKL), a foreigner-only casino operator, it provides overseas customers with hotel-style inpatient accommodations and 24-hour medical monitoring. In Mapo-gu, Mercure Ambassador Seoul Hongdae has also added a large dermatology clinic on the third floor, below guest rooms on floors 5 to 19. The Hyde Park building in Myeong-dong likewise houses Apple Myeongdong on its lower floors, hospitals and clinics including dermatology clinics on floors 3 to 8, and Stanford Hotel Myeongdong on floors 9 to 18.

According to figures from the Ministry of Health and Welfare, 2,011,822 foreign patients visited medical institutions in South Korea last year, exceeding 2 million for the first time. Of these, 87.2% visited hospitals in Seoul. Foreign medical tourists spent KRW 1.7228 trillion, a 12-fold increase in five years. The domestic production induced by total medical spending of KRW 3.3 trillion by foreign patients reached KRW 22.8 trillion.

When a hospital moves into a building, spending spreads to restaurants, cafes, cosmetics stores and pharmacies in the same building as patients wait before procedures and recover afterward. An analysis of card spending data by Cushman & Wakefield Korea found that total sales across W Building and S Building along Gangnam-daero increased by 65% and 32%, respectively, after large clinics moved in. Since hospitals can afford higher rents than general office tenants, the trend of filling entire buildings with hospitals has spread beyond Gangnam to the area around Hongik University Station in Mapo-gu. Good People Building near Hongik University Station on Subway Line 2 originally leased most of its upper floors as offices, but added hospitals and clinics to each floor as existing leases expired. Skin and cosmetic clinics have also moved into large numbers at H Cube Building in the Hongdae commercial district.

Experts say that for combinations of different businesses to generate long-term returns, they need to be supported by the purchasing power of consumers in the surrounding area. The rapid growth of hotel-and-hospital combinations targeting foreign demand, while mixed-use complexes that combined shared offices, cafes and housing three to four years ago have faltered amid a slowdown in the startup market, reflects the same trend. "It's not simply a matter of bringing different businesses together; what matters is which businesses are combined," Jeong said. "The profitability of newly emerging mixed-use spaces will depend on how strong the consumer base supporting that market is."

This content was produced with the assistance of AI translation services.