Korail Issues Service Contract for Land Supply and Marketing Strategy Development
Pre-Marketing to Begin Early Next Year
Land Sale Promotion Starts in Second Half of Next Year
Considering Bonus Points for Domestic and Foreign Companies Participating in Sales
Competing for Locations with Hong Kong, Singapore, etc.
Considering Leasing Some Parcels
KORAIL, responsible for implementing the Yongsan International Business District project, has begun preliminary work such as establishing marketing strategies ahead of the land sale scheduled for the end of next year. This procedure aims to identify the demands of major companies including global corporations, domestic anchor companies, and international organizations, and to review sales methods and marketing strategies.
According to KORAIL on the 3rd, CBRE Korea, a global real estate services firm, was recently selected as the contractor for the "Yongsan International Business District Urban Development Project Land Supply and Marketing Strategy Establishment Service" commissioned by KORAIL.
Through this service, CBRE Korea will present △ the vision and goals of the Yongsan International Business District △ optimized land supply strategies and supply plans △ investment attraction strategies and execution plans to revitalize the project.
Service Initiated Ahead of Yongsan International Business District Land Sale at End of Next Year
Based on this, KORAIL will start preliminary marketing for the Yongsan International Business District from next year. After infrastructure construction begins in November next year, land sales will commence around December. Land sale promotions will be conducted by block in the second half of next year. Following Seoul City's announcement of the Yongsan International Business District development plan in February, KORAIL has also begun preliminary work to establish land sale plans.
The Yongsan International Business District is a large-scale urban development project with a total project cost reaching 51 trillion KRW, including land acquisition, infrastructure construction, and sale prices. The public sector (KORAIL and Seoul Housing & Communities Corporation (SH Corporation)) will build the infrastructure, after which the private sector will begin developing individual sites.
Attracting 'Global Companies' is Key
Since the Yongsan International Business District development project is a large-scale business district located in the heart of Yongsan, Seoul, attracting global companies and international organizations is essential. The task specifications require analyzing the location competitiveness by comparing Yongsan International Business District with world-class cities such as New York and Hong Kong, as well as assessing risks and potential of the project site. Additionally, all possible land supply methods?including sales, direct development, equity sales, and building construction followed by resale?are to be reviewed, along with legal and tax issues applicable at each stage of land supply.
In particular, KORAIL has requested identifying and presenting the demand for attracting domestic and international anchor companies, international organizations, and investors suitable for the name "Yongsan International Business District." Conducting surveys targeting global corporate headquarters and renowned overseas architectural firms to derive trends and directions for global international business districts is also included as a task. Furthermore, branding strategies for the international business district and naming and concept setting for each block are to be established.
A KORAIL official stated, "It would be ideal if global companies purchase land to use as their Asia regional headquarters, but it is also possible for general investors to propose projects by attracting global companies. We are reviewing various options, including giving additional points to domestic and international companies that attract global companies or participate in land sales."
Incentives for Tenant Companies Also Under Review
The pool of prospective tenants will be selected from those capable of creating ripple effects. Incentive provision plans to encourage their tenancy, customized sales strategies, and sector-specific attraction strategies will also be developed.
The timing and method of land sales must consider various variables. KORAIL plans to determine the sales targets and timing for each parcel based on real estate market conditions. Various methods such as competitive bidding, public offering, and lotteries will be reviewed. Since selling all land at once may make sales difficult, it is highly likely that parcels will be divided and sold in phases.
A KORAIL official said, "The scale is not suitable for purchase by one or two companies, so it is expected that participation will likely be in the form of consortia including financial investors."
Besides land sales, options such as leasing parcels or direct development participation by KORAIL and SH Corporation are also being considered. If land is leased, rental income received immediately may be low, but land prices will inevitably rise. However, there is an advantage in that the land can be operated for public facilities. For example, in the case of the Yeouido IFC site owned by Seoul City, the land is leased to IFC owners with a lease structure where buildings are donated to the city after 100 years.
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