Government Announces PF Project Adjustment and Support
Goyang and Hanam K-pop Specialized Venues 'Gain Momentum'
Entertainment Companies Struggling with Venue Shortage Also Rejoice
A breakthrough has emerged in the K-pop market, which has long suffered from a chronic shortage of concert venues. This is because the K-pop concert hall project was included in the 'Support Plan for the Activation of Corporate Investment Projects' announced by the government on the 8th. Both companies directly promoting concert hall construction projects and those struggling to secure venues are welcoming the move. It is said that this will provide an opportunity for K-pop infrastructure to become solid and for the market to grow in the long term.
Goyang and Hanam K-pop Concert Halls to Gain 'Momentum'
Choo Kyung-ho, Deputy Prime Minister and Minister of Economy and Finance, stated, "To create the first domestic K-pop concert hall in Goyang, Gyeonggi Province, and the K-Culture Valley, we will support the prompt resumption of construction and completion by 2026 based on reasonable adjustment plans including changes to the business plan and schedule to be presented in November, as well as consultations between both parties." The K-Culture Valley is a 'K-content experiential complex' development project centered on a 40,000-seat K-pop specialized arena being developed by CJ LiveCity, a subsidiary of CJ Group. It is being carried out as a public-private joint construction investment project (PF) together with Gyeonggi Province. It is also the largest private development project in the northern Gyeonggi region. However, due to rising raw material prices and labor costs, funding became difficult, and construction has been halted for more than half a year since last April, making the original goal of completion in 2024 virtually unattainable.
CJ LiveCity said, "We regard this announcement as a result reflecting the government's broad consensus and expectations regarding the need to build cultural infrastructure," and added, "We expect to regain momentum for the project through grand cooperation between the public and private sectors." They also stated that if the adjustment agreement with Gyeonggi Province, which mainly involves a request for an extension of the completion period, is finalized, construction will resume. If the extension is not permitted, the developer is estimated to owe Gyeonggi Province more than 100 billion KRW. Gyeonggi Province set the condition of 'completion within 48 months after groundbreaking' when the project was announced. Failure to meet this condition has resulted in delay compensation fees due to breach of contract.
Additionally, the government's announcement has accelerated the timeline for experiencing the famous Las Vegas venue 'Sphere' in Korea. The administrative procedures for the K-pop concert hall project promoted by Hanam City and the American company Sphere will be shortened from the existing 42 months or more to 21 months. Construction is expected to begin as early as 2025.
Entertainment Companies Expected to Strengthen Profitability
The 'Sphere' in Las Vegas, USA, during Halloween. It is the world's largest spherical performance venue. [Photo by Sphere Facebook]
Although K-pop's popularity continues to grow, concert hall infrastructure is failing to keep up with demand. With the remodeling of Jamsil Main Stadium underway, there is currently no venue that can accommodate more than 20,000 people. Even when expanding the scope to venues with a capacity of over 10,000, options are limited to KSPO Dome, Gocheok Sky Dome, and the former Sempio Remicon site in Seongsu-dong, Seoul, which has recently started to be used as a temporary concert hall. Among these, Gocheok Sky Dome is difficult to book during the professional baseball season, and the Seongsu-dong venue is outdoors, making it heavily affected by weather. KSPO Dome is experiencing a 'booking war.' At last month's National Assembly audit of the Ministry of Culture, Sports and Tourism, Ryu Ho-jeong, a lawmaker from the Justice Party, pointed out, "All bookings for this year were already finished in the first half, and there are even cases where venues are being transferred for a premium."
In fact, only two singers were able to perform at KSPO Dome last month. Other singers who failed to secure bookings had to reduce the scale of their performances or adjust their dates. Due to these circumstances, entertainment companies are welcoming the revitalization of the K-pop specialized concert hall project. If concert hall infrastructure improves, it is expected to greatly benefit the profitability of entertainment companies. This is because concert revenue accounts for a significant portion of their total sales. Last year, the combined concert revenue of the four major entertainment companies (HYBE, SM, JYP, YG) was 603.5 billion KRW, accounting for 14.9%. With offline concerts becoming more active this year, it is expected to approach 20%.
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