HDC Hyundai Development Company proposes project financing at CD+0.1% and minimum relocation loan of 2 billion won per household
POSCO E&C offers CD+0.7% financing rate and 1.5 trillion won project acceleration fund
HDC Hyundai Development Company and POSCO E&C, both competing to win the redevelopment project for Yongsan Maintenance Depot Zone 1, have put forward unprecedented proposals to win the votes of union members.
HDC Hyundai Development Company has focused on reducing the actual financial burden for union members and maximizing their returns by offering favorable terms regarding financing, relocation loans, construction costs, construction period, and compensation for unsold units. POSCO E&C, on the other hand, has unveiled financial benefits designed to minimize the financial burden on union members while fostering a mutually beneficial relationship with the union.
HDC Hyundai Development Company proposes lowest-ever financing rates for urban redevelopment
HDC Hyundai Development Company has proposed a project financing rate of CD+0.1%, which is the lowest ever offered in the history of urban redevelopment projects. Given that the project budget amounts to several hundred billion won, this condition can significantly reduce interest expenses.
The minimum relocation loan for union members is set at 2 billion won per household (LTV 150%). The same LTV applies to any additional loans exceeding the relocation loan. This is the highest level ever seen in redevelopment projects. Even small-scale owners with lower appraised asset values can secure sufficient relocation funds under this plan.
HDC Hyundai Development Company has proposed a construction cost of 8.58 million won per pyeong, which is more than 1 million won lower than the union's expected price of 9.6 million won per pyeong. According to HDC Hyundai Development Company, they have managed to keep the price per pyeong low while including a total floor area 5,843 pyeong larger than their competitors, thereby enhancing project profitability. The proposed construction period is also shorter than competitors, at 42 months, which is 5 months less.
Additionally, in the event of unsold non-residential units such as commercial spaces and offices, HDC Hyundai Development Company has promised to compensate with property at the higher of either the "initial general sale price" or the "appraised value at completion."
In terms of complex design, HDC Hyundai Development Company has proposed a layout with 9 buildings, which is 3 fewer than POSCO E&C's 12 buildings. This structure is advantageous for securing greater distances between buildings and larger landscaping areas. HDC Hyundai Development Company is collaborating with the landscaping team from Samsung C&T Resort Division to create a residential environment focused on maximizing the time residents spend within the complex.
POSCO E&C's construction costs and payment options
POSCO E&C has proposed a project financing rate of CD+0.7%. For additional relocation loans, they guarantee a loan-to-value (LTV) ratio of 160% and apply a financing rate of CD+0.85%. The same interest rate applies to the project acceleration fund, which is the largest ever for a redevelopment project at 1.5 trillion won.
Union members can choose between two payment options for their share of the project costs: "100% payment upon move-in" or "deferred payment over 2+2 years after move-in." Regardless of the chosen payment method, no loan interest will accrue before move-in.
For construction cost payments, POSCO E&C has proposed the "progress payment within sales revenue" condition. This means that construction costs are paid according to the progress of the construction, but only within the scope of sales revenue secured through unit sales.
Additionally, POSCO E&C has offered several other conditions: an 18-month grace period for construction cost payments after groundbreaking, a 20-month grace period for construction cost increases after bidding, and the lowest financing rates through agreements with the five major first-tier banks.
POSCO E&C has proposed a construction cost of 8.94 million won per pyeong (3.3 square meters). In the event of unsold commercial facilities, compensation will be provided at the management disposition price, and for office facilities, POSCO E&C has offered to assume responsibility as the tenant.
The redevelopment of Yongsan Maintenance Depot Zone 1 involves constructing 12 buildings with 6 basement levels and 38 above-ground floors at 40-641 Hangangno 3-ga, Yongsan-gu. The project will include 777 apartment units, 894 officetel units, retail and neighborhood facilities, and office spaces. The union plans to hold a joint briefing at the end of this month, followed by a general meeting in mid-June to select the final contractor.
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