Asset Sales Pursued Since 2022 to Improve Financial Soundness
Repeated Bulk Sale Failures... Turnaround Through Piecemeal Sales
Apartment and Office Units Sold... Only One Floor Remains
Efforts to Reduce Deficits... Seeking Solutions for Free Ride Losses
Seoul Metro is accelerating the sale of real estate assets in Yongsan-gu, totaling 85 billion won. This initiative, which began in 2022 to improve financial soundness, shifted to a piecemeal sale after the failure of a bulk sale, leaving only one floor remaining to be sold.
According to Seoul City and the maintenance industry on July 23, Seoul Metro recently sold five office units (on the 17th floor) of the 'Central Park Tower' it owns in the area around 98 Hangangro 3-ga, Yongsan-gu, for 6.8 billion won.
Location of 'Central Park Tower' held by Seoul Metro, which is promoting the sale of the area around 98 Hangangro 3-ga, Yongsan-gu (1 apartment unit and 49 office rooms). Seoul Metro
The company acquired these assets by participating in the redevelopment project of Yongsan District 4, where the Yongsan tragedy occurred in 2009. Initially, it owned about 2,217 square meters of land underground along Subway Line 4, but instead of receiving cash compensation during redevelopment, it secured equity and participated in the project. Of the Central Park Tower built on this site, Seoul Metro owns one apartment unit and 49 office rooms (across four floors), with the base price, including estimated value and VAT, reaching 85 billion won.
However, after failing to escape years of operating losses, the company attempted to sell the assets in 2022 as part of a public institution management innovation plan. The sale of non-operational real estate, which would not affect subway operations, was considered first, and a bulk sale was attempted that year but failed.
In August of the following year, the apartment unit was sold for 3.5 billion won, but the four office floors, valued at 81 billion won, failed to find a buyer. In December of the same year, even after lowering the price by 16 billion won to 64.7 billion won, the sale was unsuccessful.
Starting early this year, the company adopted a strategy of selling the property in parts. Taking into account the lack of market demand for large bundled office properties, the company offered the units floor by floor. In April of this year, the 21st floor (10 units) was sold for 13.7 billion won. In May, the 19th floor (10 units) and 20th floor (12 units) were sold for 13.9 billion won and 15.8 billion won, respectively. Last week, the 17th floor (5 units) also found a new owner for 6.8 billion won. Only the 18th floor (12 units) remains. The company has listed it for 15.8 billion won, and if it sells at this price, the total from the piecemeal sales will be similar to the amount from the last bulk sale attempt last year (65.8 billion won), meaning the company is unlikely to incur significant losses from selling in parts.
Seoul Metro plans to further strengthen its financial soundness starting with this asset sale. According to Seoul City and other sources, as of the end of last year, the company’s total debt stood at 7.3473 trillion won, with accumulated deficits reaching 18.9222 trillion won. Over the past three years, interest expenses on the debt alone have amounted to 300 billion won.
The company is also pursuing measures to reduce its deficit. Last year, the company posted a net loss of 724.1 billion won, with losses from free rides accounting for 57% of this amount. The 150-won increase in the basic subway fare last month was implemented for the same reason. In the past, the company has also pushed for the sale of complex transfer centers and train depot sites.
Recently, Seoul Metro filed a lawsuit against the Ministry of Patriots and Veterans Affairs, requesting compensation for the cost of free rides provided to national merit recipients. While the amount is not large, the increase in the number of national merit recipients has led to greater losses from free rides, and the company is seeking for the government to shoulder at least part of this burden.
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