As everyone thinks that neither the international business district development nor the reconstruction and redevelopment will realistically happen within a few years, the neighborhood is quieter than expected.
On the 8th, the area around the last large idle site in central Seoul, the former Yongsan train maintenance depot, felt deserted despite the relatively mild 6 C weather. Only a week has passed since the groundbreaking ceremony to develop this area, which had been left a barren field for more than 10 years, into an international business district, but it was hard to find any warmth even in nearby real estate offices. There were few listings on the brokerage windows, and notices saying "accepting listings" filled the empty spaces.
The Yongsan International Business District is a mega urban development project that will invest a total of 51 trillion won on a 456,000-square-meter site. Oh Se-hoon, the Seoul mayor, pushed it in 2007, but it was derailed in 2013 as the 2008 global financial crisis and other issues hit. After Oh was re-elected in 2022, he formalized the relaunch of the project, and on Nov. 27, a groundbreaking ceremony was held to officially take the first shovel.
But just as the project was about to enter full swing, it suddenly hit a reef. Relevant ministries, including the Ministry of Economy and Finance and the Ministry of Land, Infrastructure and Transport, said on the 5th that "the Yongsan maintenance depot development land owned by the Korea Railroad Corporation (KORAIL) is also subject to the president's order to 'suspend all government asset sales.'" Earlier on Nov. 3, President Lee Jae-myung ordered a complete halt to the "fire sale" of public assets and demanded a full reexamination of ongoing matters. Accordingly, the Yongsan maintenance depot site is said to be included in this review.
When relaunching the project this time, the Seoul city government decided, unlike in the past when the private sector would buy the land and develop it wholesale, to have KORAIL and the Seoul Housing and Urban Development Corporation (SH) jointly implement it. The public sector would invest about 12 trillion won to build infrastructure and then raise massive development funds by splitting and selling the land to the private sector. It was a plan to enhance project stability, but because KORAIL holds the development land, it paradoxically became inevitably subject to the direct impact of President Lee's order to suspend asset sales.
The ripple effects of the situation were also evident at nearby real estate offices visited that day. A licensed realtor in Ichon-dong, Yongsan-gu, Seoul, said, "It's been only three days since the government announced its position, so there hasn't been a big change in asking prices," adding, "Because the positive catalyst was so old, there was a brief buzz early last year, and just as transactions were about to pick up again recently, the order to halt sales of public land made the groundbreaking more subdued than expected and took the air out of the market."
With the international business district development widening the gap between buyers and sellers, the market is in wait-and-see mode. Notably, areas expected to benefit from the development include the Jungsan special planning district in Seobu Ichon 2-dong, the Sibeom-Mido union, and Ichon District 1. This area is called prime land, with the Han River in front and the international business district development site behind. However, even as good and bad news broke one after another recently, asking prices did not come down, listings were scarce, and inquiries were not pouring in as they used to.
For example, a 59-square-meter exclusive unit at Jungsan 1st Sibeom Apartments, completed in 1970, was listed on Naver Pay Real Estate for 1.5 billion won on the day of the visit. That is 440 million won higher than the Aug. 17 actual transaction price (1.06 billion won). At the same time, another listing of the same size posted on Nov. 10 for 1.4 billion won is still there.
Another nearby real estate official said, "Since these are all old apartments built in the 1970s, many believe that 'sooner or later they will be redeveloped or reconstructed,' so it seems they are holding out even in so-called negative conditions," adding, "There are many homes that could come onto the market, but sellers are unwilling to sell cheaply and, if anything, want more than the latest actual transaction prices."
However, as uncertainty grows over the entire project, an overall delay in the schedule appears inevitable. Originally, land sales were to begin in the second half of next year, but sales of state assets could be suspended indefinitely until new government guidelines are set. An industry official said, "Some say there may be political interests ahead of next year's local elections, but above all, as time passes, various expenses are added, and if prices are raised to avoid controversy over fire-sale prices, the incentives for private corporations to participate will inevitably decline."