Hyundai Motor Group is pushing to build the Global Business Center (GBC) in Samsung-dong, Gangnam-gu, Seoul, in cooperation with external investors rather than on its own. This is part of its strategy to minimize the financial burden in promoting the 3.70 trillion won (US$3.25 billion) project and normalize profitability this year.
Hyundai Motor Group is seeking to jointly develop the GBC with foreign pension and sovereign wealth funds, global investment funds and leading South Korean companies that have shown interest in the project, according to industry sources on March 10. The group is highly likely to establish a special purpose company (SPC) with external investors to share the cost of building the GBC.
The GBC is a project to construct five buildings on 79,342 square meter land area, which is 11 times larger than a soccer field, including a 105-story tower, a 35-story building for accommodation and office space, and three six to nine-story buildings for exhibitions, conventions, and performances. The 105-story tower will be 569 meter high, taller than the 555 meter Lotte World Tower with 123 floors in Jamsil, currently the tallest building in the country.
Hyundai Motor Group purchased the building site from the state-run Korea Electric Power Corp. for 10.55 trillion won (US$9.28 billion) in 2014. Its purchase price was more than three times higher than the estimated market price at the time. Hyundai Motor Co. paid 55 percent of the amount, while Hyundai Mobis Co. and Kia Motors Corp. forked out 25 percent and 20 percent, respectively.
Hyundai Motor Group has decided to pursue a joint development of the GBC in order to minimize the financial burden. In particular, Hyundai Motor invited its shareholders and market experts and held “CEO Investor Day” on Feb. 27. At the event, the company announced its plans to invest 45.30 trillion won (US$39.84 billion) in research and development (R&D) and future technologies over the next five years until 2023. However, it is having difficulty in raising capital due to poor business showings amid worsening market conditions.
Hyundai Motor Group is said to benchmark the Hudson Yards development project in Manhattan, New York, which is considered one of the biggest development projects in the United States. It is the huge project being developed along the Hudson River. Global investors specializing in real estate and financial companies are taking part in the joint development project. Global leading real estate developers are also forecast to participate in the project.
Meanwhile, the GBC project received government approval in January, and after getting permission from the Seoul city government, work should begin in earnest within the year for completion in 2023.