Yongsan project stuck in politicsWhether the city will revive a collapsed mega-development project in Yongsan looks like it could become a hotly contested issue among contenders in the upcoming Seoul mayoral election.
Initiated in 2007, the 31 trillion won ($27.3 billion) Yongsan International Business District, which encompassed train lots owned by the Korea Railroad Corporation (Korail) and residential areas, was considered Korea’s largest-ever property development plan, meant to turn the neighborhood into a large international complex of offices, malls, hotels and apartments.
The initiative was jointly led by the Seoul Metropolitan Government and the state-run Korail, but after banks hesitated to issue loans in the aftermath of the 2008 global financial crisis, the project went on a downward slide.
A groundbreaking ceremony was held in 2011, but work was suspended the following year amid a capital crunch. The project was eventually liquidated in 2012 after Korail, the largest stakeholder, decided to revoke the land contracts.
The crippled project resulted in a slew of lawsuits among involved parties and appears to be sharply dividing frontrunners in the upcoming local elections once again, as well as property owners and private construction companies.
Coming off the heels of Saenuri lawmaker Chung Mong-joon’s latest remarks on the project, in which he said he intended to gradually revive the initiative if elected mayor, incumbent Seoul Mayor Park Won-soon in a Wednesday radio interview dismissed the lawmaker’s idea as merely “repeating a nightmare that has haunted people over the past seven years.”
Project manager Dream Hub defaulted on 5.2 billion won worth of interest on 200 billion won of asset-backed commercial paper last March, leading the city government to formally revoke the initiative in September.
Since then, Mayor Park has expressed his intention to separately develop land from Korail that formerly served as a maintenance center for trains and included residential property in Ichon-dong, Yongsan District, central Seoul.
“After settling lawsuits, the city will develop the Korail land as planned,” Park continued, “But the Ichon-dong area will undergo changes in a tailored way, considering [the space.]”
However, Chung told reporters that Seoul should go ahead with the plan in order to attract foreign investment and create jobs.
“The residents I know want the project to be resumed,” the seven-term lawmaker said.
He added that he intends to revive the Yongsan project in a way that benefits residents, and accused Mayor Park of attempting to “do nothing.”
The two lawmakers have previously shown different approaches toward urban development and challenged each other’s stances on the initiative before.
The current mayor reiterated that he will focus on preserving and refurbishing urban areas, rather than demolishing them and constructing new high-rises.
While, Chung, a son of Hyundai Group founder Chung Ju-yung and the controlling shareholder of Hyundai Heavy Industries, opted to develop untapped areas in Seoul in a bid to spur investment.
Other candidates, meanwhile, have also voiced their opinions on the issue, though their platforms are far from concrete.
“We should deal with the issue very carefully and consider the property,” said former Prime Minister Kim Hwang-sik, of the ruling Saenuri Party.
Although, the Saenuri’s Lee Hye-hoon stated that she was against “Dubai-style development,” indicating that she is on a different path than Chung.
Urban experts have also remained divided over the called-off project.
Oh Jong-ryeol, an economics professor at Seowon University, said its cancellation only instigated uncertainty among investors.
“Seoul city needs to take a more definite approach rather than flip-flopping,” the professor said.
And Kim Soo-hyun, a property management professor at Sejong University, maintained that only time will tell.
“Now, multiple lawsuits are going on and we don’t know which party will obtain the rights to the Korail land after the legal battles are over,” he added. “So, we need to look at the results of the suit and then develop the lot first to verify whether the project is worth expanding.”
BY PARK EUN-JEE [firstname.lastname@example.org]