In 2011, when the first shovel was turned for the 'Lotte World Tower (formerly Lotte Super Tower)' in Sincheon-dong, Songpa District, Seoul, the Lotte Group was full of momentum. Its core subsidiary, Lotte Shopping, had surpassed annual sales of 20 trillion won, and LOTTE Chemical posted a record operating profit of 1.5 trillion won that year. Lotte Engineering & Construction, the company responsible for the construction, proudly held a large event on the day the foundation work began, asserting it would become a 'global landmark.' Lotte Construction was also filled with hope that it could secure contracts for world-class skyscrapers after completion.
According to industry sources on the 7th, major subsidiaries of Lotte Group are facing a liquidity crisis, which has led to the label of the 'Skyscraper Curse' being attached to them. This theory, suggesting that the construction boom of skyscrapers leads to crises, was proposed by Deutsche Bank analyst Andrew Lawrence in 1999 after analyzing 100 years of construction industry cases. It implies that when an economic boom occurs, corporations begin to erect skyscrapers, but the enormous construction costs lead to increased liabilities or an economic downturn.
Lotte World Tower was a long-desired project of the late Shin Kyuk-ho, honorary chairman of the Lotte Group. When it opened in 2017, its value was estimated at 4.2 trillion won, including land costs, taxes, external work, and contributed acceptance. Lotte Engineering & Construction stated that it invested about 3.8 trillion won in construction costs and 526 billion won in traffic improvement projects. More than 5 million workers were involved from the groundbreaking to the opening in April 2017. The structure contained 50,000 tons of steel, enough to construct seven Eiffel Towers. The amount of concrete used was 220,000 cubic meters, sufficient to build 3,500 apartments of 32 pyung (105 square meters). Along with this, state-of-the-art construction techniques were employed, including the wind-resistant and earthquake-resistant design methods, the 'three-day cycle' construction technique that allowed one floor to be built every three days, and concrete conveying technology that shot concrete up to 500 meters.
A representative from a major construction company noted, 'The construction costs for skyscrapers vary greatly depending on specific factors such as the number of floors and the state of the ground,' adding, 'As the height increases, the thickness of the concrete in the lower levels changes, which inevitably drives up construction costs.' According to domestic building codes, skyscrapers are defined as buildings that exceed 200 meters in height or have more than 50 stories.
Last November, Lotte Group provided Lotte World Tower as collateral to four domestic banks. This was to bolster the credit rating of LOTTE Chemical's corporate bonds. The current value of Lotte World Tower is known to reach 6 trillion won. The larger LOTTE Chemical, which was reinforced by the group, was heavily impacted by surplus supplies of Chinese products and the operational activities of petrochemical facilities in the Middle East and Southeast Asia. Following a deterioration in performance starting in 2023, a loss of benefits from corporate bonds occurred, placing the company in a position where it had to repay over 2 trillion won in corporate bonds. LOTTE Chemical sold 75% of its equity in its Pakistani subsidiary (LCPC) and is seeking to secure 1.4 trillion won in cash using its 40% equity stake in its U.S. Louisiana subsidiary (LCLA) and equity from its Indonesian subsidiary (LCI) as collateral.
Lotte Group's retail sector, which is its mainstay, also faced a crisis. Following China's 'THAAD (Terminal High Altitude Area Defense) ban', which stemmed from providing land for THAAD in 2017, the group pulled out of most of its businesses, including department stores, hypermarkets, beverages, and confectionery that had entered the local market. In addition, concerns were raised that the family management dispute and the management vacuum due to Chairman Shin Dong-bin's legal risks caused the group to miss the opportunity to recover. Compounding these issues, the onset of the COVID-19 pandemic and the emergence of 'Coupang' led to a sharp decline in traditional retail companies' performance. Lotte Shopping's annual sales, which reached 30 trillion won in 2015, shrank to 13.9986 trillion won last year.
A university professor who requested anonymity stated, 'One could argue that the capabilities of the group, which should have focused on new business for the years it was pursuing Lotte World Tower, were dispersed. While the tower itself did not cause Lotte Group's liquidity crisis, it can be said to have provided a catalyst.'
Most of the skyscrapers that were underway at the time of Lotte World Tower's completion could not even begin construction. Notable examples include the Ttukseom Global Business Center (110 stories) in Seongdong District, Incheon Tower in Songdo (151 stories), and the Seoul Light Building in Sangam-dong (133 stories). The Yongsan International Business District, which was announced by the Seoul city government last November and is around 100 stories, also faces many obstacles before the project can become a reality.
Hyundai Motor Group decided to make significant changes to the design of the Global Business Center (GBC) it planned to construct on the site of the former KEPCO premises in Samsung-dong, Gangnam District. Initially, they had plans for a 105-story (561 meters) skyscraper but decided to construct three 54-story (242 meters) buildings instead. Hyundai Motor Group explained that this decision was made considering safety issues and soaring construction costs, as well as changes in the internal and external business environment. The construction industry estimates that raising a building from 49 to 60 stories would increase construction costs by at least 25%. While some in Gangnam District who were expecting a 'symbolic skyscraper' expressed opposition, the Seoul city government stated it would expedite negotiations regarding public contributions and detailed designs.
Professor Yoo Seon-jong from Konkuk University stated, 'In times of economic prosperity, corporations often build skyscrapers as a display of power, only to face difficulties later, a frequent occurrence in the past.' He suggested that 'In a situation where predicting economic conditions is challenging, Hyundai Motor Group likely concluded that constructing three buildings would be much more efficient.'
Cho Young-kwang, a researcher from Daewoo E&C, remarked, 'Hyundai Motor Group's decision to change the design seems to indicate a focus on internal stability rather than displaying external power.' He noted, 'As uncertainties about the future have increased, large corporations have begun to make more conservative judgments.'