'10 Trillion' Won Land Empty for 10 Years... Citizen Inconvenience Grows Due to GBC Delays [Why&Next]

Hyundai Motor and Seoul City Disagree on Maximum Floor Count, Project 'Stalled'
About 5% Progress, 4 Years Since Groundbreaking but Still in Early Stage
Project Delays Cause Traffic Inconvenience and Prolonged Property Rights Issues
Public Contribution '105-Story Observatory' Uncertain,
"Need to Create a Landmark Considering Cultural Value"

As Hyundai Motor Group's Global Business Complex (GBC) set to be built in Samseong-dong, Gangnam-gu, Seoul, clashes with the Seoul city government, the permit authority, over the maximum number of floors, the slowdown in the project is causing increased inconvenience to citizens. Experts point out that the issues have extended beyond simple inconveniences like traffic disruptions to long-term problems such as property rights violations and restrictions on infrastructure use.

According to industry sources on the 6th, the project has stalled as Hyundai Motor and the city have not reached an agreement on the maximum number of floors for the GBC. Hyundai Motor intends to reduce the main GBC building from one 105-story tower to two 55-story towers, but the city insists on the original plan and has not accepted the design change submitted by Hyundai in February. The city argues that since incentives such as increased floor area ratio and relaxed public contributions were granted in 2016 based on the construction of a 105-story building, building two 55-story towers constitutes a "significant change" requiring renegotiation.

The GBC is currently undergoing excavation work following the completion of earth retaining wall construction. The progress rate is around 5%. Typically, the progress rate is estimated by dividing the "basic contract amount" by the "completed construction amount." According to the first quarter business reports of Hyundai Construction and Hyundai Engineering released last month, Hyundai Construction's progress rate is 5.27% (94.498 billion KRW / 1.79228 trillion KRW), and Hyundai Engineering's is 4.96% (38.136 billion KRW / 768.12 billion KRW). Although four years have passed since construction began in May 2020, the project remains in its very early stages. In this situation, delays in city permits for design changes are causing further construction delays.

[Image source=Yonhap News]

Prolonged Construction Increases Citizen Inconvenience

As the construction period lengthens, citizen inconvenience is growing. The head of H Real Estate Agency in Samseong-dong said, "Traffic inconvenience continues as construction vehicles come and go, and lanes have been reduced due to the simultaneous construction of the Metropolitan Area Express Train (GTX) connected to the GBC." A representative from Y Real Estate Agency near the project site also stated, "Since Hyundai Motor purchased the site 10 years ago, local residents are eagerly waiting for the project to be completed without further delays."

There is also an assessment that leaving such a prime site vacant is inappropriate from a societal perspective. Yoon Soo-min, a real estate specialist at NH Nonghyup Bank, explained, "Land has the lowest value when it is vacant. It is appropriate to maximize social value through development," adding, "Leaving a prime Gangnam business site as idle land causes losses to society as a whole."

There are also concerns that regulations related to the project are affecting the property rights of nearby residents. A representative regulation is the "Land Transaction Permission System." In June 2020, the city designated Jamsil-dong in Songpa-gu and Samseong-dong, Cheongdam-dong, and Daechi-dong in Gangnam-gu as land transaction permission zones to prevent speculative demand inflow ahead of large-scale development projects such as the GBC, Yeongdong-daero Integrated Transfer Center, and International Exchange Complex District. In these zones, transactions of housing, commercial buildings, or land above a certain standard require approval from the city, county, or district office chief.

Yoon emphasized, "The recent surge in record-high transactions in these areas is a market distortion caused by the land transaction permission system," and stressed, "Rapid project progress is necessary to resolve these issues so that residents can exercise their legitimate property rights."

Public Contributions Also at Risk... "Cultural Value Should Take Priority Over Simple Height or Economic Value"

As the GBC development stalls, the possibility of Hyundai Motor's public contributions (donations in kind) being delayed has increased. From the citizens' perspective, this means benefits from infrastructure development will be postponed. Ham In-seon, a special professor at Hanyang University and chief architect of Gwangju Metropolitan City, said, "The GBC project and the Yeongdong-daero underground space development are all interconnected, so if there is a problem with the GBC construction, it will ultimately affect the citizens who are to benefit from these projects."

The Seoul city government raised the zoning of the GBC site from a type 3 general residential area to a general commercial area with three levels of upgrade as a condition for Hyundai Motor to build a supertall landmark. The floor area ratio (the ratio of building floor area to land area) increased from 250% to 800%. Hyundai Motor negotiated with the city in 2016 to return part of the increased development profits through projects such as the Yeongdong-daero underground space complex development and the remodeling of Jamsil Sports Complex.

The representative public contribution, the Yeongdong-daero underground space complex development, is a project to create a complex transfer center with an integrated station for GTX, bus stops, and public and commercial facilities underground along Yeongdong-daero, covering a total floor area of 160,000 square meters. Above ground, a plaza 70 meters wide and 250 meters long will be constructed.

The "105-story observatory," at the center of the dispute between the city and Hyundai Motor, is also included in the public contributions. Hyundai Motor's plan to reduce the building height to 55 stories has lowered the feasibility of this observatory. Regarding this, Lee Chang-moo, a professor in urban engineering at Hanyang University, said, "While it may not be possible to force a private company to build a supertall building over 100 stories, if the value of the previously agreed public contribution (observatory) has decreased, additional incentives can be requested accordingly."

Professor Ham stated, "The observatory has cultural and spiritual values beyond economic aspects that cannot be quantified in money, and it is undesirable to unilaterally propose other forms of public contributions," emphasizing, "Efforts to create landmarks with strong symbolism, even if lower in height, like the Louvre Museum in Paris or the Guggenheim Museum in New York, are important."

Regarding public contributions, a Hyundai Motor representative explained, "The GBC design change plan includes plans to create an observatory, exhibition and convention spaces, and a performance hall comparable in scale to the existing public contributions." On the 105-story observatory, they added, "We are planning the observatory by comprehensively considering various factors such as viewing elements and operational content, not just simple height."