Development of the resort complex in Yerae, one of the core projects of the Jeju Free International City Development Center (JDC), has stopped.
The resort complex in Yerae was estimated to stretch 740 million square meters, with a total investment cost of 2.5 trillion won (US$2.1 billion). The complex was planned to have a 1,531 room resort condo and a 935 room hotel, and also a casino, medical facility with 150 beds, swimming pool, and spa.
The project operator, Berjaya Jeju Resort (BJR), is a joint venture between JDC, an affiliated organization of the Ministry of Transportation, and a Malaysian conglomerate, the Berjaya Group.
Starting in March 2013, the company had completed the construction and pre-sale of 147 condominiums. Sixty percent of construction costs have been already paid.
The spokesman of the JDC said on July 15 that the project operator, BJR, requested the construction company to stop the construction and inform the government of Jeju and JDC about the decision on July 7.
On March 30, the Supreme Court of Korea overturned the decision for land expropriation during final appellate proceedings, as land owners filed against the JDC’s project and requested the cancellation of construction.
Although BJR continued the construction for 4 months after the ruling, it financially decided that it no longer has any meaning and pulled out.
As a result of the Supreme Court ruling, the pre-sale of condominiums is no longer possible. Moreover, loans from finally institutions have become inaccessible. Due to rising costs, the construction itself has become impossible.
If the interruption will go on without any prompt resolution, there is high possibility that the project itself will be revoked. In this case, a large amount of foreign investments that have been poured into the project will be stranded, and the JDC will have to face large-scale international litigation.
Meanwhile, the government of Jeju and the JDC have remained silent on the court ruling. JDC CEO Kim Han-wook is reported to be in close contact with investors and land owners to narrow the differences. Above all, for the resumption of the construction project, JDC is said to be seeking a revision of the law, seeking support from members of Congress and the Ministry of Transportation.