Sandcastle?

Picture for Yongsan Zone remains murky

By Kim Tong-hyung

An imaginary painting of the Yongsan International Business Zone, a super-ambitious skyscraper project aimed at giving Seoul a Hong Kong-inspired facelift, is nothing short of majestic. Real-world realities, however, are anything but as they threaten to turn the country’s most expensive property scheme into a historic mess.

The plan for the enormous, riverfront facade, highlighted by a 620-meter high, 111-floor tower and two dozen other “super-high” buildings circling it, oozes with unbridled optimism and swagger that can be nauseating in times like these, when the property market is decaying faster than last year’s yogurt. And no, rethinking a 150-floor building for a 111-story one doesn’t come close to qualifying as a timely adjustment.

The Yongsan Zone was a crucial part of the Seoul Metropolitan Government’s now-ridiculed “Han River Renaissance’’ project, which vowed to turn the grayish Korean capital into an attractive waterfront city.

When completed in 2016, the business hub was to attract 140 million commuters and visitors every year, create up to 360,000 jobs and generate 67 trillion won in production value, according to Seoul City’s old news releases.

Such glassy-eyed predictions seem rather absurd now when the property and construction sectors look to have taken an irrevocable turn for the worst.

When Samsung C&T and the 16 other construction companies committed to the project in 2007, the country’s real estate market was at the tail-end of its mid-2000s peak. Than all things came tumbling down with the Lehman Brothers in 2008 and the property sector has been breathing heavily on the ropes ever since.

All hands seem ready to bail if they are allowed to. There was a lengthy squabble between the Yongsan developers on how to cut the 31 trillion won (about $27.4 billion) bill between them, a dispute patched up by municipal authorities like a band aid over a deep wound.

Political backing is precarious as well. Former Mayor Oh Se-hoon, the architect of the Han River Renaissance plan, is stammering somewhere after making the ill-advised decision to hang his job as mayor on combating free school meals.

New Mayor Park Won-soon appears to see the Yongsan Zone as a basket case of a project rather than an asset.

Neighboring residents have been vocal in expressing their opposition for ``skyscraper-ville’’ and Park has said more than once that the project will not be pushed forwardly blindly without their consent. This opens the possibility that the finalized form of the Yongsan Zone could be a mini-version of what was promised in the original blueprint.

In unveiling the artist’s portrayal for the Yongsan Zone Wednesday, the Yongsan Development Company, the asset management company representing the investors, talked glowingly about fostering the area into an Asian hub for business, finance and leisure. It bears further watching whether it could put its money where its mouth is when market observers continue to wonder whether the city is walking blindly into an urban landscaping disaster of biblical proportions.

Aside of KORAIL, the state-run rail operator that owns the land near Yongsan Station that is up for development, and the Seoul Metropolitan Government, the project involves a slew of big companies, including Samsung Everland and Lotte Tour. Samsung C&T, which was originally supposed to be the main workhorse, bowed out after clashing with other investors in 2010.

The Yongsan investors have so far committed to spend 10 trillion won on the development project. The remaining 20 trillion won will have to come from selling office space at the five business complexes and the 4,000-plus housing units.

The investors plan to put these office and housing units on sale sometime around the first-half of next year but market watchers are skeptical whether there will be demand for them.

``That is just a massive amount of supply that the market may not be able to absorb. With the housing market as bad as it is, it’s hard to imagine people jumping to splurge on pricy, lavish apartments in the high rise buildings. And it’s also hard to imagine the investors selling the office space without luring a foreign company or too, and that’s far from a sure thing,’’ said a real estate analyst from a local financial company.