ED Skyscrapers' economic windfalls

Government should not let Gangnam District monopolize development gains of GBC

A debate has flared anew on how to share the development gains from the construction of Hyundai Motor's new headquarters, the Global Business Center (GBC), in Samseong-dong, southern Seoul. It is not right for the Gangnam District, where the GBC is located, to seek a monopoly on the astronomical sum of real estate development profit. Such a hoarding of Hyundai Motor's “public contribution” will lead to reinvestment in the already wealthy district, which, in turn, will push up property prices there even higher.

Seoul Mayor Park Won-soon expressed a similar view on Facebook, Monday. Park also criticized the current legal system, which lets Gangnam monopolize the almost 1.75 trillion won ($1.43 billion) in public contribution Hyundai Motor must make in return for development proceeds. Seoul City Hall is trying to change the situation by asking the Ministry of Land, Transport and Infrastructure to amend related laws. It is seeking to spend the 450 billion won that remains for the balanced development of the entire city.

Mayor Park says that it is not desirable to concentrate development gains only in the southern Seoul area, calling for its “extension to all of Seoul.” When it comes to the balanced development of the entire nation, however, real estate development gains should not be limited to the capital city but be dispersed to the rest of the country. Officials need to face the reality in which social and economic concentration in Seoul and its vicinity have been aggravating property prices, sending them sky-high in the metropolitan area.

The public contribution to be made in Seoul this and next year amounts to 2.9 trillion won. Out of the total, 2.4 trillion won will go to the three southern Seoul districts ― Gangnam, Seocho and Songpa. The absurdity is clear for anyone to see.

The government should not allow the monopoly of the public contributions by the three districts under the pretext of regulation restricting the use of such an economic windfall to create public facilities in specific areas. The land, transport, infrastructure ministry should listen to calls for expanding the use of public contributions, and improve the system in ways to distribute future development gains evenly among as many localities as possible.