Carmaker seeks investment for headquarters

Hyundai Motor Group is seeking outside funding for its stalled new headquarters project as it shifts investment priorities toward research and development (R&D).

The automaker will establish a special-purpose company to finance the development of a site in Samseong-dong, Gangnam District, according to financial investment sources. Hyundai Motor originally acquired the land to build its 105-story Global Business Center (GBC) headquarters.

The construction project faced hurdles in recent years as the company’s business has struggled with increasing competition. The group paid 10.5 trillion won ($9.26 billion) for the site back in 2014.

Instead of its original plan of internal funding, the group is now looking for local and foreign investors, benchmarking the Hudson Yards Project in New York that raised investment from real estate and financial companies. The $25-billion project near the Hudson River is expected to host numerous skyscrapers by 2024.

“As the GBC’s location is outstanding and there will likely be a high rate of return if a building is built, numerous domestic and foreign investors are upbeat about the GBC project,” said an investment banking source.

The automaker’s decision to seek outside funding comes as it announced new investment plans last month for the next five years amid disappointing results last year. After Hyundai Motor recorded its worst operating profit since 2010 in the final quarter last year, it announced plans last month to spend 30.6 trillion won on R&D and 14.7 trillion won on new technologies, such as automated driving.

The future investment is a 58-percent increase from those made over the past five years.

The move to shift investment toward R&D could relieve investor worries that the real estate project will add to the financial pressures the company faces.

The site in southern Seoul is prime real estate that sits next to the InterContinental Grand Seoul Parnas hotel and the Starfield Coex Mall. There are also plans in the area to develop the Seoul International District and a major transportation transfer center.

Hyundai Motor Group bought the site for the GBC from Korea Electric Power in 2014.

In the five years since the purchase, the site’s official assessed value rose 19.7 percent on average per year. The project, which faced regulatory hurdles, was green lighted last year as part of the government’s efforts to encourage corporate investment.

BY MOON HEE-CHUL, CHAE YUN-HWAN [chae.yunhwan@joongang.co.kr ]