Three Months After Anti-Corruption Commission Mediation... Exchange Site Search Still Underway
[Asia Economy Reporter Onyu Lim] The Seoul Metropolitan Government has begun the price appraisal process for the land in Songhyeon-dong, Jongno-gu, owned by Korean Air.
On the 1st, Seoul announced that it recently initiated administrative procedures to conduct an appraisal for pricing the Songhyeon-dong land together with Korean Air.
According to the adjustment by the Anti-Corruption and Civil Rights Commission (ACRC) completed on April 26, involving Seoul, Korean Air, and Korea Land and Housing Corporation (LH), the price of the Songhyeon-dong land will be determined by the arithmetic average of the amounts appraised by four appraisal firms?two recommended by Seoul and two by Korean Air.
Last year, Seoul set the compensation cost for the Songhyeon-dong land at 467.133 billion KRW, while Korean Air prepared a self-rescue plan to sell the land for at least 500 billion KRW. Considering the official land price and other factors, the final price is likely to be decided between these two amounts.
Although discussions on the price of the Songhyeon-dong land between Seoul and Korean Air have begun, there has been no progress yet on the search for exchange land, which is a matter to be agreed upon between Seoul and LH and is the core of the ACRC adjustment.
The ACRC adjustment stipulates that LH will enter into a contract to purchase the Songhyeon-dong land from Korean Air, Seoul will provide other city-owned land to LH, and then receive the Songhyeon-dong land.
The sale contract for the Songhyeon-dong land is to be executed after the exchange city land between Seoul and LH is decided, clearly stating that the decision on the exchange city land comes first.
Therefore, even if Seoul and Korean Air agree on the price of the Songhyeon-dong land, Seoul must decide on the city land to be handed over to LH in order to acquire the Songhyeon-dong land.
Korean Air, too, can only receive payment once the sales contract with LH is signed, regardless of the price appraisal under the adjustment terms. Ultimately, Seoul must quickly decide on the exchange city land to satisfy the parties involved in the adjustment.
Previously, Seoul considered giving the site of the Western Driver’s License Test Center in Sangam-dong, Mapo-gu, to LH, but the plan fell through due to opposition from Mapo-gu and local communities.
The Seoul Medical Center site in Samseong-dong, Gangnam-gu, emerged as an alternative candidate, but recent sharp increases in official land prices have made it difficult to match the scale of the Songhyeon-dong land, complicating this option as well.
The Songhyeon-dong land, covering 37,141.6㎡ around 48-9 Jongno-gu, was the site of the U.S. Embassy staff housing from liberation until 1997. Ownership transferred from the government and Samsung Life Insurance to Korean Air in 2008.
Korean Air had plans to build a hanok hotel and a cultural convergence complex, but these were scrapped, and Seoul has been promoting park development since early last year. The Songhyeon-dong land was recently selected as one of the candidate sites for the tentatively named “Lee Kun-hee Donation Hall,” which will exhibit items donated by the late Chairman Lee Kun-hee.
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