[Exclusive] Apartment to Be Built on Land Owned by Lotte Owner Family... Expected Profit 10 Times Higher

Holding 20% of Land in Yeomgok-dong Public Housing District
Purchase Time Official Price 2 Billion KRW, Now 10.6 Billion KRW
Compensation at Double Official Price 21.2 Billion KRW
Lotte Shopping Acquires 987 Pyeong Near Family Land

It has been confirmed that the land owned by Chairman Shin Dong-bin and other members of the Lotte Group's founding family, located in Seocho-gu, Seoul, is included in the Seoul public housing district. If land compensation is made, they are expected to receive at least 20 billion KRW in compensation.

In the public housing district project area near the Yeomgok-dong garage announced by SH Corporation, grass and trees are growing densely. There are nets installed, and crops are planted in the fields.
Photo by Han Jinju

Seoul City recently announced plans to designate a 55,343㎡ area in Yeomgok-dong 329 as a public housing district. The city plans to build 851 public housing units there. Seoul City and the implementing agency SH Corporation plan to prepare the district plan within the year, undergo review, and complete the district designation as early as the beginning of next year. Compensation procedures will begin after the district designation.

Among this, the land owned by the Lotte Group's founding family accounts for about 20% (approximately 3,000 pyeong) of the project site. Chairman Shin owns 3,007㎡ (910 pyeong), and his older brother, Shin Dong-ju, former Vice Chairman of Lotte Holdings and Chairman of SDJ Corporation, owns 5,023㎡ (1,519 pyeong). Both brothers purchased their land in 1987. Shin’s half-sister, Shin Young-ja, Chairperson of the Lotte Scholarship Foundation, bought 2,559㎡ (774 pyeong) in 2002. Lotte Shopping also owns 3,264㎡ (987 pyeong).

It is difficult to determine exactly how much the Shin family paid for this land and how much compensation they will receive. Referring to past official land price records, the total official land price at the time of their purchase is estimated to be about 2 billion KRW. The current official land price is 10.6 billion KRW.

SH Corporation plans to develop this area through expropriation. In this case, compensation is usually made at about twice the official land price. If so, the compensation amount for the three members of the Lotte founding family is expected to be around 21.2 billion KRW.

The current site is classified as a natural green area. According to the Ministry of Economy and Finance’s preliminary feasibility study guidelines, the compensation multiplier for natural green areas within Seoul is 1.84 times the official land price. When SH Corporation developed the Naegok district in Gangnam-gu near Yeomgok-dong, they compensated at three times the official land price, about 5.3 million KRW per 3.3㎡.

An industry expert in appraisal said, "The average amount is calculated based on evaluations by landowners, project implementers, and appraisal firms recommended by the city," adding, "The compensation multiplier is only a reference, and although it is usually 2 to 3 times, the actual compensation amount may vary."

Regarding Lotte Shopping’s purchase of land near the founding family’s land, the company explained it was "for the purpose of building a mart." Lotte Shopping acquired 3,264㎡ (987 pyeong) at San 3-6, Yeomgok-dong, 11 years after Chairman Shin and others purchased their land, in 1998. Generally, building a mart requires a land area of at least 8,265㎡ (about 2,500 pyeong). It appears that Lotte Shopping’s mart establishment plan was not a realistic option.