[Urban Development in Turmoil] ① Seongsu HL Group and Yangjae Harim Sites Stir... War to Attract Landowners

Projects Stalled by Bridge Loans Seek Revival Through REITs
Donated University Land and Regional Station Areas Also in the Running
Japan 2?5% vs Korea 13%: Hopes to Ease Real Estate Concentration

HL Group is moving to establish a project REIT (Real Estate Investment Trust) to build a new headquarters-grade office on the former Han Sung Motor Mercedes-Benz Service Center site in Seongsu-dong, Seoul. A project REIT is a development-specialized REIT that can be launched with a simple registration at the real estate development stage and continues through construction, operation, and dividends after completion. Since project REITs were introduced in Korea in November 2025, urban development using project REITs has been emerging in areas such as Gangnam, Seoul, and is now expanding into northern Seoul.

Just two months after the implementation of project REITs, the multi-trillion-won urban complex development market in Seoul is experiencing significant upheaval. According to industry sources on January 23, HL REITs Management, the asset management company (AMC) of HL Group, recently submitted a project REIT registration for the 'HL Seongsu Project Entrusted Management Real Estate Investment Company' to the Ministry of Land, Infrastructure and Transport. Once development is complete, the site is expected to serve as a second headquarters or rental office for affiliates such as HL Holdings and HL D&I Halla. Following MDM Group, Korea's largest real estate developer and the first to launch a project REIT, Koramco Asset Trust, SK D&D, and now HL Group are joining in, drawing even more attention to the trend.

Companies such as HL are focusing on project REITs because they see an opportunity to eliminate the intermediary margins (premiums) previously taken by brokers or developers during the development process and secure high-quality assets at cost. An executive at an AMC operating a listed REIT explained, "Most REIT shareholders, like pension funds and retirement pensions, seek stable dividends. By securing assets at cost from the early stages through a project REIT, we can provide higher dividends to investors." He added, "Since the entire process from development to operation is managed under a single system, costs can be minimized."

Koramco Asset Trust, Korea's number one AMC, and real estate developer SK D&D have also submitted project REIT registration applications for a super-large office development project near Gangnam Station, with a total project cost of 1 trillion won. In the public sector, Incheon Urban Corporation is promoting the Jemulpo Station urban complex project (3,497 households) through a project REIT.

Harim, Hyundai Motor, Lotte... Prime Land in Gangnam and Seocho to Be Unlocked

The former cargo terminal site located south of Yangjae IC in Seocho-gu, Seoul. Harim Industrial, an affiliate of Harim Group, is promoting the development of a logistics complex center here. Harim Industrial

The most promising candidate site for a project REIT is the former cargo terminal site in Yangjae-dong, purchased by Harim Group ten years ago. The plan is to develop a high-tech urban logistics complex on the 83,183-square-meter site, including logistics, retail, office facilities, apartments, and officetels. With a total project cost of 6.8712 trillion won, the key issue is how to structure the financing. An official in the real estate development industry commented, "Given the scale, pushing ahead with project financing (PF) solely through loans would be a heavy burden. Since options such as land in-kind contributions and equity fundraising are available, it is highly likely that a project REIT will be considered."

Hyundai Motor is also looking to utilize project REITs. At the end of last year, it signed a memorandum of understanding (MOU) with Koramco Asset Trust and others, and is currently reviewing development and securitization of real estate holdings located in key areas of the Seoul metropolitan area and major cities. The parking lot site across from Hyundai Department Store's Trade Center branch in Samseong-dong is also being considered for project REIT utilization. The concept is a mixed-use facility with six basement levels and 33 above-ground floors on a 5,600-square-meter site. Since a large portion of the asset can be operated as rental offices, it is considered well-suited to the purpose of the project REIT system, which is to manage assets from development through to operation.

Lotte Chilsung Beverage's logistics center site in Seocho-dong is also considered a major candidate. This prime site near Gangnam Station covers about 13,000 pyeong. The Lotte Chilsung site has a book value of approximately 400 billion won, but its market value is estimated at 3 to 4 trillion won, making the tax burden and project cost upon development quite substantial. Project REITs could serve as a solution. Lee Kyungja, head of the Alternative Investment Team at Samsung Securities Research Center, stated, "Preparations are underway to develop the site using a project REIT structure," adding, "Since discussions with the Seoul Metropolitan Government regarding floor area ratio and other matters are necessary, final approval could come as early as this year."

Location map of the Lotte Chilsung site in Seocho-gu, Seoul. Nearby is the Lion Mising site. Seocho-gu · Samsung Securities

There is also interest in whether project REITs can revive projects that have stalled due to funding issues after receiving approval. A representative example is the Bichui Town area in Daechi-dong, Gangnam-gu, near Samseong Station, managed by Daishin Asset Trust. This site, appraised at 225.4 billion won, was even put up for auction after failing to repay a bridge loan. There is speculation that project REITs could normalize the project by attracting equity investment instead of additional loans.

Lee Jin, head of policy research at the Korea Developer Association, said, "Non-residential projects stuck in bridge loans and unable to transition to main PF are positively considering project REITs," adding, "If funding is secured, even just reducing the risks of joint guarantees or defaults would be a significant help for developers."

Other candidates include university-donated land, and in the provinces, Hanwha Solutions' 'Newon City'-a 1-trillion-won mixed-use development project at the Ulsan KTX station area-is being mentioned as a project REIT candidate. A Hanwha Investment official noted, "PF projects carry risks because tax benefits have sunset clauses. We are considering project REITs as an option when reviewing development projects."

Seoul Complex Development Boom Could Release 290 Trillion Won in Assets

The market believes that this system could serve as a catalyst for large corporations to convert 'book assets' that have been left idle into 'real value.' According to Samsung Securities, as of the end of 2024, real estate-related assets (tangible assets and investment properties) accounted for an average of 13.2% (290 trillion won) of the total assets (about 2,207 trillion won) of Korea's 12 major business groups. In comparison, the real estate asset ratio for major Japanese companies is only 2-5%, indicating that Korean companies are excessively concentrated in real estate, resulting in lower capital efficiency.

Lee Kyungja of Samsung Securities added, "A significant number of sites that could not be utilized for long periods due to tax burdens are located in prime areas of Seoul. Recently, development plans for railway and terminal sites such as Yongsan Station, Seoul Station, East Seoul Terminal, Gangnam Express Bus Terminal, and Sinjeong-dong Western Truck Terminal have become clearer, fueling the Seoul complex development boom." She continued, "With the tax deferral benefits of project REITs, companies now have more incentive to utilize previously non-earning sites. As these projects are being promoted in the form of complex developments, this is also expected to ease the supply of housing in Seoul."