Itaewon Crown Hotel Site... Transformed into High-End Residential Space
Adjacent to Yongsan Park and Benefiting from Shinbundang Line... Excellent Location Conditions
An artist's rendering of the high-end residential and commercial complex planned for development by Koramco Asset Management after the demolition of the Itaewon Crown Hotel.
[Asia Economy Reporter Kwangho Lee] Koramco Asset Management announced on the 30th that it will establish Case Square Yongsan PFV (Project Financing Vehicle) to transform the Itaewon Crown Hotel into a luxury mixed-use residential complex.
The Itaewon Crown Hotel is a 4-star hotel located at 34-69 Itaewon-dong, Yongsan-gu, Seoul, and has been a landmark hotel in Itaewon since 1980. It boasts an excellent location adjacent to Itaewon Station and Noksapyeong Station on Subway Line 6, and across the 7,011㎡ (2,121 pyeong) hotel site is Yongsan Park.
Koramco Asset Management plans to develop a luxury mixed-use residential complex on this site, consisting of approximately 150 units of apartments, officetels, and commercial facilities, spanning from four basement floors to 25 floors above ground. Taking advantage of the location facing Yongsan Park beyond the fence, all units will have park views, and instead of the monotonous floor plans of existing residential facilities, new high-end residential spaces with various layouts and structures reflecting different lifestyles will be supplied.
Hyundai Construction will be in charge of construction, with groundbreaking scheduled for June 2023 and completion targeted for May 2026. Currently, Koramco and Hyundai Construction are reportedly reviewing the application of a new high-end brand exclusively for this project.
Recently, the expansion of development projects by Koramco Asset Management and its parent company Koramco Asset Trust has been notable. Previously, Koramco Asset Trust developed a luxury residential officetel called ‘Insignia Banpo’ in Banpo, Seoul, and directly sold units. They also developed an office building near Gangnam Station, which achieved full occupancy immediately upon completion. Additionally, Koramco Asset Management is developing a massive-scale data center in the Gasan Digital Complex in Seoul and is undertaking the development of the ‘Gyeongsan 4 General Industrial Complex Integrated Logistics Center,’ the largest rental logistics center in the Yeongnam region, thereby leading improvements in logistics infrastructure in the area.
Koramco is a real estate finance company managing approximately 28 trillion KRW in real estate assets through REITs and real estate funds. It has mainly purchased and operated physical assets or invested in shares of real estate-related assets. However, recently, it has increased its share of development projects through REITs, funds, and PFVs, showing a different investment approach than before.
The ‘opportunistic strategy’ of development projects carries significant risks compared to the ‘core strategy’ of investing in physical real estate, but successful projects can yield investment returns three to four times higher. However, most asset management companies lack the experience and capabilities to participate in development projects prematurely.
Koramco’s parent company operates REITs and real estate trust businesses, while its subsidiaries focus on real estate funds. While REITs and real estate funds are finance-specialized business units, real estate trust business is closer to development and construction projects. The know-how for design, permits, and construction management necessary for development projects is embedded within the affiliates, allowing Koramco to avoid risks and improve business efficiency, unlike competitors.
Unlike major asset management companies struggling to defend appropriate investment returns due to the sharp rise in commercial real estate prices in Seoul and the metropolitan area and interest rate hikes after COVID-19, Koramco is increasing profitability based on synergies among its affiliated business units.
Moreover, on the 14th, Koramco Asset Management additionally obtained REIT AMC approval. It plans to leverage the REIT expertise of its parent company, the undisputed No.1 private REIT in Korea, and place investment properties developed in-house into REITs to enhance operational stability and profitability.
Koramco is reviewing multiple industrial development projects such as data centers and logistics centers in addition to this mixed-use residential development project, and further expansion of development projects is expected in the future.
Park Hyung-seok, CEO of Koramco Asset Management, said, “We will maximize the locational advantage next to the edge of Yongsan Park and supply a splendid residential facility representing Yongsan,” adding, “We will continue to discover profitable development projects based on synergies between Koramco Asset Management and its parent company.”
© The Asia Business Daily(www.asiae.co.kr). All rights reserved.
