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Lost bid to dampen real estate, companies

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July 06,2007
Pyeongchang’s failure to win the 2014 Winter Olympics hit stocks and is likely to hurt the local real estate market.
Shares in Kangwon Land Inc., Korea’s only casino for local citizens and the closest gambling center to the proposed Olympics site, dipped more than 11 percent on the Korea Exchange. It was the biggest one-day drop ever for Kangwon Land.
Tourism shares were also hurt. Hana Tour Service, one of Korea’s biggest travel agencies, lost 1.3 percent while Modetour, the No.2 market player, shed 2.8 percent.
According to the Ministry of Culture and Tourism, about 75 million tourists, mostly Koreans, visited Gangwon Province last year. The bidding committee was expecting an extra 120,000 high-spending foreign tourists during the Olympics, not to mention the carry-over effect from heightened international publicity.
Real estate will be another sector likely to take a hit from the lost bid. In the last five years, as Pyeongchang has eyed the Olympics twice, real estate prices have risen about 1,000 percent in some areas, to as much as 500,000 won ($544) per square meter.
“Government investment in infrastructure that would have continued if the bidding was successful will come to a stop,” said Shin Pil-gyu, a real estate agent in the area. “The fall in real estate prices is obvious.”
Thirteen venues were slated to be used for the 2014 Winter Olympics, and seven of them are currently under construction, with various dates for completion. How the venues will be used now has not been decided.
In 2006, the Pyeongchang bid committee estimated the operating budget for the games at $1.3 billion. According to Pyeongchang’s official bid file, the Korean government provided $75 million for Pyeongchang’s efforts in 2006, while the Gangwon provincial government shelled out $47.5 million.
The central and provincial governments had plans to split construction costs for venues.
The committee estimated $530 million in revenue from the Olympics from ticket sales and corporate sponsorships.

By Hwang Young-jin, Yoo Jee-ho Staff Writers [yhwang@joongang.co.kr]


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