Located in the heart of Yeouido International Financial Center District, Hana Securities Building Owned
Current Floor Area Ratio 580%... Future Development Potential More Than Doubled
Koramco Asset Trust announced on the 16th that 'Koramco The One REITs,' which achieved a 100% occupancy rate last month and announced an upward revision of its target dividend yield, will benefit from Seoul City's Yeouido Financial Center District Unit Plan (draft).
Koramco The One REITs is a REIT (Real Estate Investment Trust) listed on the KOSPI by Koramco Asset Trust, the top private REIT management company in Korea. It has invested primarily in the Yeouido Hana Securities Building and has been paying quarterly dividends to investors at an annual yield of around 6% based on the public offering price. Due to recent vacancy resolution, it plans to increase dividends to the mid-7% range annually starting in the second half of this year.
The 'Yeouido Financial Center District Unit Plan (draft)' announced by Seoul City last month aims to transform Yeouido into a global digital financial hub by drastically easing various regulations. The floor area ratio (FAR) for new building developments within the district will be relaxed from the current 800% to over 1200%, and height restrictions will be completely abolished, laying the groundwork for the development of supertall buildings.
Seoul City announced plans to create a 'Korean Manhattan' centered around Yeouido Station, with East Yeouido featuring supertall landmark buildings with a floor area ratio exceeding 1000% and heights over 350 meters. Additionally, the plan includes establishing a 'Seoul representative skyline' with creative designs on major buildings, turning the Han River waterfront into an iconic scenic hub.
The market response to Seoul City's announcement was first detected in major apartment complexes undergoing reconstruction in Yeouido. The Shibeom Apartment, the oldest complex in Yeouido with confirmed reconstruction, saw its 118㎡ unit sell for 2.2 billion KRW last month, up 200 million KRW from the end of last year. The Hanyang Apartment, which will be reconstructed up to 54 floors, also saw its 149㎡ unit trade for 2.4 billion KRW last month, 300 million KRW higher than the previous transaction in April. Furthermore, sellers' asking prices have uniformly risen, reflecting growing development expectations.
The next phase after apartment reconstruction is expected to be the commercial real estate market. The East Yeouido area is densely packed with major financial institutions, including the Hana Securities Building owned by Koramco The One REITs, 28 large securities firms, the Korea Exchange, the Financial Supervisory Service, and the Korea Financial Investment Association.
The current allowable floor area ratio for buildings in this area is 800%. By applying creative and innovative designs during reconstruction, an additional approximately 400% floor area ratio can be granted, allowing development up to a 1200% floor area ratio, significantly increasing asset value potential.
In particular, the Hana Securities Building, located just 100 meters from Yeouido Station in the heart of the international financial center district, was constructed with a significantly lower floor area ratio of 580% compared to nearby buildings. Under Seoul City's new standards, reconstruction will enable development potential more than twice the current level.
Moreover, beyond redevelopment, additional facilities such as retail and office spaces can be developed by utilizing external ground parking lots, offering diverse value enhancement options through floor area ratio increases.
Accordingly, real estate values are also rising. Before Koramco The One REITs was listed, the appraisal value of the Hana Securities Building was 26 million KRW per pyeong, but the nearby Shinhan Financial Investment Building, sold to the Aegis Asset Management consortium in the third quarter of last year, traded at 32 million KRW per pyeong. Considering this, the real estate value of the Hana Securities Building has increased by over 16% in about a year, and the rise is expected to accelerate as the Yeouido Financial Center District Unit Plan becomes more concrete.
Yoon Jang-ho, Vice President of Koramco Asset Trust, said, “The Hana Securities Building is not only a core asset capable of generating stable rental income through long-term leases with global companies but also an opportunity-seeking asset with limitless development potential.” He added, “As the manager of Koramco The One REITs, which owns this building, we plan to implement creative and diverse strategies to provide investors with returns exceeding expectations.”
Meanwhile, Lee Kyung-ja, an analyst at Samsung Securities, stated, “Koramco The One REITs demonstrates the advantages of office REITs with strong inflation hedging through flexible rent increases,” and set a target price of 5,900 KRW for Koramco The One REITs.
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