Korea Asset Management Corporation (KAMCO) has tentatively halted the sale of office buildings in Seoul's Yeoksam and Yongsan and in Suwon, Gyeonggi Province, worth a total of about 150 billion won. The move follows the government's order to suspend the sale of state-owned property and President Lee Jae-myung's remark that asset should not be sold off cheaply.
According to the financial sector on the 18th, KAMCO began the sale in Oct. last year of Cowon Tower in Yeoksam, Seoul, the KY Building (formerly the Kumyoung Building) in Yongsan, and the Hanwha Life Insurance Building in Suwon. These were company headquarters KAMCO purchased through a "sale support program" that acquires asset from corporations facing liquidity crises during the COVID-19 pandemic, and the agency moved to sell as commercial real estate values have recently risen.
KAMCO set the expected sale price for the three properties at around 150 billion won through appraisals. Cowon Tower, located in the Gangnam Business District (GBD) of Seoul, is a small office building with four underground floors and seven above ground, and a total floor area of 5,309.49 square meters (1,606 pyeong). KAMCO purchased Cowon Tower for about 21 billion won in Mar. 2017, and the appraised value is 67.9 billion won. The building failed to attract a bid in the first auction, and the sale process was subsequently halted.
The KY Building, located on Hangang-daero in Yongsan, is a mid-sized office building with four underground floors and 15 above ground, and a total floor area of 8,250.41 square meters (2,495 pyeong). The appraised value was 55.47 billion won, and it was awarded for 60.1 billion won in Oct. last year, but the deal was canceled.
KAMCO purchased the Hanwha Life Insurance Building from Hanwha Life Insurance in 2021 for around 22 billion won through a sale and leaseback arrangement. It has one underground floor and 12 above ground, with a total floor area of 13,262.98 square meters (4,011 pyeong). The planned sale price this time was the appraised value of 25.44 billion won.
KAMCO's suspension of asset sales follows the president's order to halt the sale of state-owned property. In Nov. last year, Lee raised suspicions that the previous Yoon Suk-yeol administration sold state-owned property at bargain prices and issued an emergency directive to that effect. Later, at the Financial Services Commission presidential policy briefing held on the 19th of last month, Lee also raised concerns of bargain-price sales to KAMCO, saying, "There are reports that contracts were made by private contract below the appraised value."
KAMCO opens bidding at the appraised value and, if there are three failed attempts, lowers the price by 10% from the appraised value and bids again. After that, a private contract can be concluded at a price lower than the appraised value. Because bidding can attract offers higher than the appraised value, KAMCO's current asset sale is not a bargain-price sale as pointed out by the president.
Following the president's instruction, the government tightened procedures to require reporting to the relevant National Assembly standing committee when selling state-owned property worth 30 billion won or more. A financial industry official said, "If the sale of state-owned property has to be reported to the National Assembly, the process could become complicated due to constituency petitions."