The Secret Behind Daejang-dong's 850 Billion Won Profit in Reality... 'Low Compensation Costs, High Sale Prices'

Land Compensation Costs 30-40% Lower Than Expected
10x Excess Profits Through Forced Land Expropriation

[Asia Economy Reporter Naju-seok] During the development process of Daejang-dong, it was pointed out that land compensation was significantly lower than the expected cost, while the sale price exceeded the land acquisition cost by more than ten times. It is said that a profit of 850 billion won was realized thanks to the exploitation of the original residents and the burden on the new residents.

According to the ‘Business Plans of the Three Consortia Participating in the Daejang-dong Development’ disclosed by Park Soo-young, a member of the People Power Party, on the 5th, the compensation price was set lower than the expected cost. According to the ‘Seongnam Pangyo Daejang Urban Development Project Development Plan Amendment (Draft)’, compensation costs were set at 618.462 billion won. However, in the business plans submitted by the consortia to the Seongnam Urban Development Corporation, all anticipated compensation costs were about 1 trillion won.

For example, the Hana Bank consortium, which includes Hwacheon Daeyu Asset Management, expected 1.014161 billion won, the Meritz Securities consortium expected 1.001063 billion won, and the Korea Development Bank consortium expected 889.2 billion won. The actual compensation cost was set about 30-40% lower than the expected compensation cost.

Additionally, according to the land compensation contracts of the original residents of Daejang-dong secured by Rep. Park, the average price per pyeong (3.3 square meters) of land was about 5.21 million won. One original resident Park met at Seongnam City Hall said they were forcibly acquired at 2.5 million won per pyeong. However, the average sale price per pyeong of houses on five plots taken by Hwacheon Daeyu Asset Management was about 25 million won. Assuming general construction conditions, Park’s office estimated the construction cost at 14 million won per pyeong, suggesting a profit of 8.5 million won per pyeong. This calculation supports the claim that Hwacheon Daeyu made about ten times the profit by forcibly acquiring land at around 2.5 million won per pyeong.

Rep. Park said, "Behind the record-breaking profit rates of 1,011,400% or 115,400% achieved by some figures involved in the Daejang-dong Asura Gate, there were special favors setting compensation costs thousands of billions lower than expected, the exploitation of original residents, and the burden on new residents." He added, "Lee Jae-myung, the Democratic Party presidential candidate and Governor of Gyeonggi Province, claimed to ‘strengthen the strong and help the weak,’ but he designed a project that crushed the hearts of the weak and helped the wicked, a truly ‘crushing the hearts of the weak and helping the wicked’ business.”